Offshore portfolio investments surge to $2 B

The Bangko Sentral ng Pilipinas (BSP) said it recorded an inflow of about $2.101-billion reflecting offshore portfolio investments made by local investors from January to June this year.

According to the BSP, this contrasted with the $516-million outflow that it recorded over the same period last year when Filipino investors were taking advantage of attractive market prospects abroad.

“Risk-aversion goes both ways,” said BSP deputy governor Diwa Guinigundo. “Last year investors want to invest abroad, this year they are taking their funds back, even funds they invested before 2007.”

Last year, Filipino investments abroad became easier as the BSP liberalized its rules on offshore investments, lifting de facto restrictions on capital outflow.

The BSP approved the revisions in the forex restrictions on individual investments abroad, raising the limit on allowable investment that would not require prior BSP approval from $6 million to $12 million per investor per year.

For purposes of purchasing forex from banks, the BSP also allowed outward investments in forex-denominated bonds issued by the National Government and other Philippine entities.

The BSP liberalized these rules further by simplifying the documentary requirements for outward investments, scrapping requirements that took time to process.

As a result, Filipino investments abroad actually started to pick up and increased by over 50 percent for the whole of 2007.

This year, however, the BSP said it expects a significant withdrawal of Filipino investments from abroad.

“Some people feel that their funds are safer closer to home,” Guinigundo said.         – Des Ferriols