FDI rose 10.6% in first half of 2012

Foreign-fund managers looking to cash in on the country’s long-haul growth prospects poured $917 million worth of foreign direct investments (FDI) in the first six months, pushing the level 10.6 percent higher.

These are the more permanent kind of foreign capital entering the economy in a given period and much preferred by regulators over the more amorphous portfolio variety also known as “hot” money.

The bulk of the FDI was in the form of equity investments in a number of brick-and mortar businesses in the Philippines totaling $1.07 million, generating jobs for Filipinos and taxes for the national coffers in the process.

Equity placements during the period totaled $1.215 billion, while withdrawals or repatriation totaled only $145 million, a movement that testifies to the oft-cited claim that the Philippines remains clearly on the radar screen of foreign-fund investors.

FDI in June alone totaled $73 million or more than 10 times larger than in May, when it stood at only $7 million and 16 percent higher than FDI a year earlier of only $63 million.

Equity capital in June totaled $78 million from only $48 million the previous May and only $20 million in June last year.

According to the Bangko Sentral ng Pilipinas (BSP), the fund managers opted for reinvesting $23 million worth of profits from their local ventures during the month, instead of sending them back to foreign principals abroad.

Even more, their Philippine operations have proved so profitable they paid back what they owe their foreign principals $28 million worth of loans in June for the sixth time in a series this year.

Such paybacks are booked by the BSP as net other capital to represent the inter-company borrowing/lending activities between the foreign direct investors and their subsidiaries or affiliates in the Philippines.

Net other capital in the first six months, therefore, now total $227 million and contrasted sharply against last year’s tally, when the flow of funds was in reverse.

As a result, the reinvested earnings in the first six months this year, while remaining positive, totaled only $74 million versus year-ago reinvested earnings of $172 million.

The numbers mean that the local subsidiaries and affiliates were able to pay back loans owed to foreign principals in greater volumes this year although, in doing so, they reported fewer reinvestments than was done last year. –JUN VALLECERA | REPORTER, Businessmirror