FDI inflows surge 154% in Jan-Feb

MANILA, Philippines - Foreign direct investment (FDI) inflows surged 154 percent in the first two months of the year on the back of the country’s strong macroeconomic fundamentals amid global economic growth concerns and the debt crisis in Europe, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP Governor Amando Tetangco Jr. said in a statement that FDI inflows amounted to $850 million in the first two months of the year or $515 million higher than the $335 million booked in the same period last year.

 “The respectable growth of FDI reflected favorable investor sentiment as the country’s macroeconomic fundamentals remained strong amid continuing concerns over the sovereign debt crisis in some parts of Europe and the moderation in global economic activity,” he said.

Data showed that equity placements surged 1,317 percent to $893 million in the first two months of the year from $63 million in the same period last year while withdrawals jumped 266.7 percent to $77 million from $21 million.

The BSP chief pointed out that equity capital infusion in January and February came from the US, Australia, Japan, and Kuwait and were infused into various sectors led by manufacturing, wholesale and retail trade, real estate, financial and insurance services, mining and quarrying as well as information and technology.

The BSP reported that other capital account consisting largely of intercompany borrowing between foreign direct investors and their subsidiaries or affiliates in the Philippines plummeted by 111 percent to a net outflow of $24 million in January and February from a net inflow of $243 million in the same period last year.

Likewise, reinvested earnings went up by 20 percent to $60 million from $50 million as foreign direct investors opted to retain part of their earnings in local enterprises.

For the month of February alone, Tetangco said FDI inflows fell 30.6 percent to $84 million from $121 million in the same month last year as other capital posted a net outflow of $21 million from a net inflow of $94 million.

Equity investments in February surged 389 percent to $132 million from $27 million while withdrawals jumped 244 percent to $55 million from $16 million. Reinvested earnings, likewise, surged 75 percent to $28 million from $16 million.

Tetangco said bulk of the inflows or $100 million represented final payment for the acquisition of shares by a foreign firm in a local beverage manufacturing firm.

Kirin Holdings of Japan bought a 43 percent stake in diversified conglomerate San Miguel Corp. (SMC) in 2009 for $1.06 billion and spent another $300 million also in 2010 to acquire an interest in San Miguel Brewing International Ltd.

International credit rating agencies took note of the country’s strong external payments position. New York-based Standard and Poor’s (S&P) recently raised the credit rating outlook to positive from stable paving the way for a possible upgrade of the rating that its currently two notches below investment grade within the next six months to 12 months.

On the other hand, London-based Fitch Ratings rates the country’s sovereign credit at one notch below investment grade while Moody’s Investors Service as well as S&P rate the country’s sovereign credit at two notches below investment grade with a stable outlook.