FDIs up 5.5% to $1.41 billion in January-November 2009

MANILA, Philippines – Foreign direct investments (FDIs) managed a 5.5- percent growth in the first 11 months of last year despite plunging by 61 percent in November due to weak equity placements and higher withdrawals, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP officer-in-charge Nestor Espenilla Jr. said FDIs posted a net inflow of $1.41 billion from January to November last year or $74 million higher than the $1.336 billion recorded in the same period in 2008.

Espenilla said equity capital net inflows went up by 12.8 percent to $1.368 billion in the first 11 months of last year from $1.213 billion in the same period in 2008.

BSP data showed that equity capital placements rose by 10.3 percent to $1.54 billion from $1.396 billion while withdrawals went down by six percent to $172 million from $182 million.

Espenilla pointed out that the bulk of the investments came from the US, Japan, Hong Kong and the Netherlands.

He added that investments were made in the manufacturing, real estate, construction, services, financial intermediation, mining, trade or commerce as well as transportation, storage, and communications sectors.

BSP data also showed that reinvested earnings soared by 205.6 percent to $133 million last year from a year-ago level of a net outflow $126 million on the back of stronger corporate earnings results in the first three quarters of 2009.

Data also showed that other capital account including intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines reversed to a net outflow of $91million from a net inflow of $249 million as a result of higher trade credits extended by Philippine-based subsidiaries or affiliates to parent companies abroad.

For the month of November alone, Espenilla reported that FDI inflows dropped by 61 percent to $82 million from $210 million in the same month in 2008 as the inflow of equity capital plunged by 95 percent to $8 million from $153 million.

“Equity capital yielded $8 million in net inflows, as investors remained cautious due to the slow pace of global economic recovery, even as the country’s underlying macroeconomic fundamentals remained sound,” he said.

According to him, equity placements fell by 78 percent to $37 million in November last year from $168 million in the same month in 2008 while withdrawals almost doubled to $29 million from $15 million.

Monetary authorities doubled the projected FDI inflows last year to $1.5 billion instead of $740 million due to strong equity inflows and higher reinvested earnings.

The BSP sees FDI inflows climbing further to $1.8 billion this year. This would result to higher gross international reserves (GIR) of about $47 billion to $48 billion this year from a record high of $45.03 billion last year.

Economic managers see the country’s domestic output as measured by the gross domestic product (GDP) growing between 2.6 percent and 3.6 percent this year from 0.8 percent to 1.8 percent last year. –Lawrence Agcaoili (The Philippine Star)