Seven-month FDI falls amid overseas worries

FOREIGN direct investments (FDI) to the Philippines fell in the first seven months of the year amid concerns over the Europe’s debt problems and a stalled recovery in the US.

In a statement, the Bangko Sentral ng Pilipinas said FDI recorded net inflows of $26 million last July, an 88.3-percent drop from last year.

The July figure brought the first seven-month FDI to net inflows of $805 million, or 9.7 percent lower than last year’s $891 million.

Gross equity capital placements at end-July declined to $289 million from last year’s $345 million.

Investments mostly came from the US, Japan, Hong Kong, Republic of Korea, and Singapore, and were channeled mainly to real estate, manufacturing, mining and quarrying, utilities, and the wholesale and retail trade sectors. Reinvested earnings amounted to $248 million, or 7.8 percent higher than the figure recorded in first seven months of 2010, as foreign enterprises opted to retain their earnings in local corporations in light of the country’s improving business sentiment.

The other capital account—which consists largely of inter-company borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines—also registered net inflows of $321 million, largely on account of trade credits extended by affiliates abroad.

This account however suffered a 38.3 percent decline from the $520 million net inflows in 2010.

FDI represents money invested by foreigners in the Philippines to put up new businesses or expand existing ones, and as such creates jobs. –Manila Times