FDI jumped 61.8% to $754 million in September

by Ben O. de Vera, Inquirer, Dec 11, 2017

A 61.8-percent jump in net inflows of job-generating foreign direct investment (FDI) in September to $754 million narrowed the year-on-year decline in the nine-month tally, the latest Bangko Sentral ng Pilipinas (BSP) data released Monday showed.

FDI rose from $466 million in September last year, bringing the total as of the end of the first nine months to $5.839 billion, down 0.2 percent from $5.85 billion last year.

The high base was brought about by inflows of about $2 billion that entered the economy in April last year when Security Bank took in Japanese banking giant Bank of Tokyo-Mitsubishi UFJ as a strategic partner with a 20-percent stake, resulting in a fresh capital infusion of P36.9 billion.

In a statement, the BSP said that in September, “investment inflows surged, buoyed by investor confidence in the Philippine economy on the back of strong macroeconomic fundamentals and high growth prospects.”

During the July to September period, the gross domestic product grew by a better-than-expected 6.9 percent, the second-fastest economic expansion in the region.

Prior to September, FDI inflows in August reached a 16-month high of $1.203 billion.

Finance Secretary Carlos G. Dominguez III earlier expressed optimism that two recent FDIs would bolster this year’s inflows — the $1.3-billion deal between Energy Development Corp. and the consortium of Macquarie Infrastructure and Real Assets and Arran Investment Pte. Ltd., as well as the $1-billion acquisition of homegrown cigarette manufacturer Mighty Corp. by Japan Tobacco International’s Philippine unit.

In September, “net equity capital investments increased by 31.8 percent to $182 million, as gross placements at $194 million more than offset withdrawals of $12 million,” the BSP said.

That month’s foreign capital infusion — the bulk of which came from China, Japan, the Netherlands, Singapore and the United States — were mostly poured into accommodation and food service, construction, manufacturing, real estate, as well as professional, scientific and technical activities.

“Investments in debt instruments issued by local affiliates, consisting of intercompany loans, grew by 75.2 percent to $513 million from $293 million in September 2016. Meanwhile, reinvestment of earnings expanded by 68 percent to $59 million during the month,” the BSP added.

But from January to September, “net equity capital recorded lower inflows at $1.1 billion from $1.6 billion” last year, the BSP said.

Most of the end-September equity capital investments were made by investors from Hong Kong, Japan, the Netherlands, Singapore and the US, with placements mainly in the construction, financial and insurance, manufacturing, real estate, as well as wholesale and retail trade sectors.

“Net investments in debt instruments grew, however, by 13.1 percent to $4.2 billion. Reinvestment of earnings for the first nine months of 2017 reached $604 million, higher by 10.4 percent from last year’s level,” the BSP said.

For 2017, the BSP had projected FDI inflows to reach $8 billion.

In June, the BSP jacked up its 2017 FDI forecast from $7 billion previously, as the 2016 inflow hit a record-high of $7.933 billion.

“The BSP expects the Philippines to sustain FDI inflows this year, close to the $8-billion level in 2016. These prospective FDIs are expected to be channeled mainly to the manufacturing sector (such as electronics and motor parts), which can help create employment and more growth opportunities,” the BSP said in October.

/atm