BSP bullish on second half outlook

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) is confident that foreign direct investment (FDI) inflows would pick up in the second half of the year after plunging sharply in the first five months of the year due to jitters about the debt crisis in Europe as well as the outcome of the first ever automated elections in the Philippines last May 10.

BSP Governor Amando M. Tetangco Jr. told reporters that the public-private partnership (PPP) initiative of the administration of President Aquino would result in higher FDI inflows in the second semester of the year.

“We are, however, bullish that as the PPP initiative of the National Government takes off, we will see investments flow in as we had projected,” Tetangco stressed.

The BSP now expects FDI inflows hitting $2 billion instead of $1.8 billion this year from $1.95 billion last year.

However, latest data released by the central bank showed that FDI inflows plunged by 68 percent to $446 million in the first five months of the year from $1.393 billion in the same period last year.

From January to May, equity placements plunged by 84.4 percent to $230 million from $1.474 billion in the same period last year while equity withdrawals surged 868.4 percent to $184 million from $19 million.

During the period, investors were overwhelmed by concerns about the debt crisis in Europe despite the success of the country’s first ever automated elections last May 10.

Tetangco pointed out that there were a number of equity capital infusions arising largely from the privatization of a local power corporation and the acquisition of a significant number of shares of a local beverage manufacturing firm.

The large inflow booked in 2009 include the investment made by China’s largest electricity provider State Grid Corp. and Monte Oro Grid Resources Corp. in state-owned National Transmission Corp. (Transco) that bagged a $3.95 billion concession contract as well as the decision of Japanese brewer Kirin Holdings to acquire a stake in Manila-based San Miguel Brewery of diversified conglomerate San Miguel Corp. worth P65.8 billion. –Lawrence Agcaoili (The Philippine Star)