Net FDI inflows jumped 30.6% to $509 million in March 2017

By: Ben O. de Vera, Philippine Daily Inquirer, Jun 13, 2017

The net inflow of job-generating foreign direct investment (FDI) jumped by almost a third to $509 million in March on the back of sustained investor confidence nine months into the Duterte administration, the Bangko Sentral ng Pilipinas said Tuesday.

According to the latest BSP data, the net inflow of FDI last March rose 30.6 percent from $390 million a year ago as well as was higher than February’s $366 million.

At the end of the first three months, FDI climbed 16.6 percent to $1.56 billion from $1.337 billion as of end-March last year.

“The sustained FDI inflows reflect investors’ confidence in the country’s economy on account of continued growth prospects and strong macroeconomic fundamentals,” the BSP said in a statement.

The gross domestic product (GDP) grew 6.4 percent during the first quarter, lower than expectations but still among the fastest economic expansion in emerging Asia.

During the first three months, net investments in debt instruments increased 108.8 percent to $1.266 billion from $606 million a year ago.

End-March net investments in equity capital, however, dropped 81.7 percent to $101 million from $550 million last year.

At the end of the first quarter, placements of equity other than reinvestment of earnings declined 70.8 percent year-on-year to $191 million, while withdrawals decreased 12.8 percent to $91 million.

BSP data showed that most of the equity capital investments from January to March were poured in by investors from Germany, Hong Kong, Japan, Singapore, and the United States.

The sectors that contributed the bulk of equity capital infusions during the three-month period were financial and insurance, information and communication, manufacturing, real estate, as well as wholesale and retail trade.

Reinvestment of earnings at end-March, meanwhile, rose 6.7 percent to $193 million from $181 million a year ago.

For 2017, the government targets net FDI inflows to reach at least $7 billion.

In 2016, the Philippines attracted a record $7.933 billion in net inflows of FDI, up 40.7 percent from $5.639 billion in 2015.

In March, the BSP said, “investments in debt instruments (or lending by parent companies abroad to their local affiliates to fund existing operations and business expansion) contributed largely to FDI net inflows during the period, registering an increase of 75.1 percent to $445 million from $254 million last year.”

“Net equity capital investments amounted to $7 million as gross equity capital placements of $49 million more than offset the $42-million withdrawals” in March, the BSP added.

The top sources of equity capital placements last March were Hong Kong, Japan, the Netherlands, Singapore and the US.

The bulk of FDI that month went to the following industries: financial and insurance; manufacturing; professional, scientific and technical activities; real estate; and wholesale and retail trade.

As for reinvestment of earnings, it increased 16.1 percent year-on-year to $56 million in March. /atm