Foreign direct investments surges to $232 million in November

MANILA, Philippines – Foreign direct investments surged by 68.1 percent to $232 million in November last year, a rare increase fueled largely by huge capital inflows into the mining sector.

The Bangko Sentral ng Pilipinas (BSP) said the November surge brought the 11-month total to $1.65 billion — less than half the inflows recorded in 2007.

Data from the BSP showed that foreign direct investments in November 2007 amounted to only $138 million.

The BSP said all FDI components posted net inflows in November. In particular, data indicated a net inflow of equity capital amounting to $160 million.

The BSP said net inflow of equity capital expanded year-on-year by almost fourfold with the equity capital infusion coming largely from Hong Kong investors, and represented mainly by purchase of stocks of a local mining company.

The BSP said the “other capital” account reversed to a net inflow of $52 million from a net outflow of $20 million in November 2007, because of repayment by foreign affiliates abroad of trade credits from residents.

Reinvested earnings also continued to post a net inflow, although the BSP said inflows were lower compared to the previous year as a result of lower profits realized by local companies.

But the BSP said the net inflows for January-November 2008 were 16.4 percent higher than the inflows recorded in the first 10 months.

On the other hand, net inflow of equity capital during the 11-month period amounted to $1 billion, nearly 50 percent lower than the 2007 level.

The BSP said the U.S., Japan, Singapore, South Korea, Germany, Malaysia, Taiwan, Hong Kong, United Kingdom, and the Netherlands were the major sources of equity capital flows.

The bulk of the inflows, according to the BSP, were channeled to the manufacturing sector, mainly into shipbuilding and repair, auto electronics parts and components and the manufacture of paper, cigarette and other tobacco products.

The BSP said there were also inflows into services, particularly recreational and cultural businesses. Inflows also went into mining and construction projects such as hotel/resort/water spa development, power plant facility, global gateway and logistics hub.

Investments were also recorded going into utilities, real estate, trade and commerce, and financial institutions.

The “other capital” account and reinvested earnings also registered net inflows amounting to $238 million and $394 million respectively. The items in these accounts consisted mainly of intercompany borrowing and lending between foreign direct investors and their subsidiaries or affiliates in the Philippines.

These levels, however, were 38.2 percent and 13.2 percent lower from year-ago levels.

The BSP explained that the decline in inter-company borrowing and lending was traced to lower loan availments by Philippine subsidiaries from their mother companies given the weak outlook in global demand. –Des Ferriols, Philippine Star