Net FDI inflows jump 26% to $1.95 billion

CEBU CITY, Philippines – Net inflow of foreign direct investments (FDI) jumped 26.2 percent last year on the back of strong equity inflows as investors continued to plough back earnings to the country in re-cognition of the resilient domestic economy, Bangko Sentral ng Pilipinas officer-in-charge Diwa Guinigundo reported yesterday.

Guinigundo told reporters that FDIs posted a net inflow of $1.95 billion last year or $404 million more than the $1.54 billion booked in 2008 and well over the $1.8 billion set by the BSP for 2009.

Data showed that net equity inflows soared by 46.2 percent to $1.806 billion last year from $1.236 billion in 2008. This after equity capital net inflows jumped 38.1 percent to $2.013 billion from $1.468 billion while withdrawals retreated by 7.2 percent to $207 million from $223 million.

The BSP deputy governor said the country continued to attract foreign investments last year as investors recognized the relative strength of the country’s underlying macroeconomic fundamentals, manageable and benign inflation, favorable external payments position, and resilient economic growth.

“I would describe as strong market in the Philippines compared to other countries which were severely hit by the global financial crisis,” Guinigundo said.

The country’s domestic output as measured by the gross domestic product (GDP) eked out a 0.9-percent growth last year depite the global economic meltdown. The growth was lower than the 3.8 percent GDP growth posted in 2008.

Guinigundo reported that bulk of the investments last year came from the US, Japan, Hong Kong, and the Netherlands. He said investments were made in the manufacturing, real estate, construction, services, financial intermediation, mining, trade or commerce as well as transportation, storage, and communications sectors.

The BSP official said reinvested earnings jumped by 33.3 percent to $84 million last year from a year-ago level $63 million on the back of stronger corporate earnings results.

“Foreign investors opted to plough back corporate earn-ings to local enterprises given clearer signs of global economic rebound,” Guinigundo added.

For the month of December alone, FDI inflows reached $170 million from $3 million in the same month in 2008 on the back of higher other capital account. Equity capital inflows slowed down to $2 million in December from $16 million in the same month last year while reinvestment earnings turned around with a net inflow of $22 from a net outflow of $24 million.

Meanwhile, Guinigundo said other capital accounts consisting largely of intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines soared to $148 million in December from $11 million in the same month in 2008.

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

“We are looking at more vigorous inflows in FDIs this year,” he said, citing strong inflows to the mining as well as business process outsourcing sectors.

Economic managers see the country’s domestic output as measured by the 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)