Pre-Aquino foreign direct investment inflows fall

Foreign direct investment (FDI) to the Philippines up to the time President Aquino assumed office fell from a year ago, according to the central bank. In a statement, the Bangko Sentral ng Pilipinas (BSP) said FDI inflows in the first half of this year reached $732 million, or 42 percent lower than the $1.270 billion in the same period last year.

In June alone, the country enjoyed inflows of $128 million, a reversal of the $123 million outflows in the same month last year.

“Positive balances were registered across all categories, as the economy continued to attract capital from non-resident investors given the country’s sound macroeconomic fundamentals and the optimism on the reform agenda of the new administration,” the BSP said, even as the period under review coincided with the final months of the previous government.

The Aquino administration managed to flesh out its policy directions only during the President’s State of the Nation Address in late July.

The BSP said the other capital account—consisting of inter-company borrowing/lending between foreign direct investors and their subsidiaries in the country—recovered with a net inflow of $404 million from a net outflow of $193 million last year.

Among the sectors that benefited from inter-company borrowings were business process outsourcing (BPO) and utilities.

Equity capital also yielded a $106 million net inflow, with the majority of the investors coming from the US, Switzerland, Japan, the Netherlands, Singapore, Ireland and Hong Kong.

The BSP said investments were directed to manufacturing, services, real estate, financial intermediation, utilities, mining, transportation/storage sectors and hotels and restaurants.

Net equity capital was lower than the $1.5 billion recorded in the same period last year because of  big-ticket investments in the first five months of 2009.

Reinvested earnings also registered net inflows of $222 million, significantly higher than the $7 million net inflows posted a year ago.

“This reflected the boost in corporate earnings in the first semester of 2010 that encouraged investors to retain earnings/profits in local firms,” BSP Gov. Amando Tetangco Jr. said.

FDI pertains to money invested by foreigners in the Philippines for establishing new businesses or expanding existing ones, and as such generates employment.

For 2010, the central bank revised its inflows projection to $2 billion from $1.8 billion earlier. –LAILANY P. GOMEZ, Manila Times