Nine-month FDI at $1.2 billion

The Bangko Sentral ng Pilipinas (BSP) yesterday reported that the country’s foreign direct investments (FDI) as of end-November totaled $1.23 billion, a very slight improvement compared to $1.22 billion the same period in 2011.

BSP statistics on FDI covers actual investment inflows while other government sources have different investment data and coverage. For the full year 2012, FDI which includes equity capital, reinvested earnings and other capital such as intercompany loans, is expected to reach $1.5 billion.

Based on the latest data, the 11-month FDI is 1.1 percent higher year-on-year. Net equity capital placements totaled $1.28 billion during the same period, 173.1 percent higher compared to 2011. This accounted for a large portion of foreign investments.

Gross-wise, equity capital placements amounted to $1.6 billion from $885 billion in the previous year and the BSP said this is “spurred mainly by the encouraging macroeconomic environment.” These capital inflows came from the US, Australia, the Netherlands, Japan and the British Virgin Islands. By sector, investments were primarily channeled to the manufacturing, real estate, wholesale and retail, mining and quarrying, and financial and insurance sectors, said the central bank.

As of end-November, FDI inflows as reinvested earnings totaled $176 million, lower by 48.2 percent compared 2011’s $340 million. The other capital account which is intercompany borrowing or lending is a net outflow of $224 million compared to a net inflow of $410 million in the same period in 2011. “The turnaround in the other capital account was due largely to resident companies’ repayment of their intercompany loans and extension of trade credits to their direct investors abroad, as well as lower intercompany loan availments,” explained the BSP.

On a month-on-month basis, FDI net inflows were higher at $102 million from $38 million in October but 72.1 percent lower than last year’s $366 million. Reinvested earnings decreased 27.3 percent to $40 million while other capital accounts reversed to a net inflow of $28 million from withdrawals worth $24 million in October.

As for net equity capital was at $34 million, lower than $47 million in October and also recorded a decline of 88.6 percent year-on-year. These inflows were sourced from investors in the US, Hong Kong and Australia and placed in sectors such as real estate, manufacturing, and mining.

The original BSP forecast for FDI was $1.2 billion for 2012 but it was revised higher to $1.5 billion after the country’s sovereign rating and outlook was upgraded by three international debt raters Standard & Poor’s, Fitch Ratings and Moody’s.

The central bank FDI data includes investments where ownership by the foreign enterprise is at least 10 percent but other government FDI gathering-offices such as investment promotion agencies do not make use of the 10 percent threshold. –Lee C. Chipongian, Manila Bulletin