Net FDI down 48% in ’08

MANILA, Philippines — Net foreign direct investment (FDI) in the Philippines last year dropped 48 percent to $1.52 billion from $2.92 billion in 2007, the central bank reported Tuesday.

The gross FDI inflow was $1.735 billion and the gross outflow, $215 million, the Bangko Sentral ng Pilipinas (BSP) said.

In December was a net FDI inflow of $89 million, down 3.3 percent from $92 million a year earlier.

The BSP blamed the drop in investments to lingering risk aversion brought about by the global financial crisis, but it said the Philippines was still in a better position than the others in that FDI remained in positive territory.

The Philippines recorded an economic growth of 4.6 percent last year.

The gross FDI inflows in 2008 included $1.56 billion in equity capital.

The major sources of FDI were the United States, Japan, Singapore, South Korea, Germany, Malaysia, Taiwan, Hong Kong, United Kingdom and the Netherlands. The investments were in manufacturing, services, mining, construction, utilities, real estate, trade and commerce, and financial services.

Fitch Ratings earlier said it expected the Philippines to record a net FDI outflow of $1.6 billion this year, reversing last year’s net inflow. [Read story]

The BSP said there was reason to believe the Philippines would still record a net inflow of FDI this year, as some sectors, including business process outsourcing, continued to show encouraging income performance.

The BSP has been easing its monetary policy. It has cut its overnight borrowing and lending rates by a total 125 basis points since December, and has slashed the reserve requirement for banks to 19 percent of deposit liabilities from 21 percent. Edited by INQUIRER.net