FDI reverses to $66-M net inflow in September

MANILA, Philippines – The Philippines managed to post a foreign direct investment inflow of $66 million in September amid concerns over the exposure of the European banks to sovereign debt and the fragile economic recovery being experienced by the US, the Bangko Sentral ng Pilipinas (BSP) said yesterday.

BSP Governor Amando M. Tetangco Jr. said in a statement that the inflow booked in September was a turnaround from the $54 million net outflow recorded in the same month last year.

“The moderate inflows this year reflected cautious investor sentiment on the back of renewed concerns over the exposure of European banks to sovereign debt and the health of the American economy, notwithstanding the strong fundamendals in the domestic economy,” Tetangco stressed.

Data showed that equity capital in September posted a net outflow of $22 million, an improvement from the $45 million equity capital withdrawn from the country in the same month last year. This after withdrawals reached $61 million while equity placements amounted only to $39 million.

On the other hand, reinvested earnings surged 767 percent to $26 million in September from $3 million in the same month last year while other capital consisting largely of intercompany borrowings from foreign direct investors by subsidiaries and affiliates in the Philippines yielded an inflow of $62 million from a net outflow of $12 million.

“The net inflows during the month were mainly driven by reinvested earnings and other capital which posted inflows that more than compensated for the net outflows recorded in the equity capital account,” the BSP said.

For the first nine months of the year, the BSP said FDI inflows fell 31.8 percent to $1.093 billion from $1.603 billion in the same period last year due to the decline in the inflows of equity capital.

The central bank pointed out that equity capital plunged 89.5 percent to $185 million from January to September compared to $1.757 billion in the same period last year when large investments in a local and beverage company and a local power corpoation were recorded.

Equity placements fell 76.4 percent to $451 million from $1.914 billion. Major sources of equity capital flows include the US, Japan, Singapore, Ireland, and Hong Kong.

The large inflows 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)