MANILA, Philippines - Foreign direct investments (FDI) dropped in October last year, but the total for the first 10 months remained on growth territory, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
FDI registered a net inflow of $38 million in October, dropping 46.5 percent from last year’s $71 million. A net inflow indicates more foreign investments entered the country than left.
Despite the drop in October performance, the 10-month FDI tally grew 32.6 percent to $1.131 billion from $853 million a year ago.
The 10-month figure also represented more than three-quarters of the BSP’s revised forecast of $1.5 billion.
The BSP did not provide reason for the October drop, but said the “cumulative increase in FDI during the 10-month period reflected investors’ positive reaction to the country’s robust economic performance.â€
The “improved outlook†brought by successive positive credit rating actions from Fitch Ratings, Standard & Poor’s Rating Services and Moody’s Investors Service also contributed to the FDI rise, the central bank said.
Last year saw the Philippines being upgraded to one notch below investment grade, a situation seen to not only further reduce debt interest payments, but also attract more foreign investments into the country.
Broken down, equity capital investments, which accounted for the bulk of FDI, more than doubled in October and rose more than seven-fold during the first 10 months of previous year, data showed.
Equity capital— consisting mainly of foreign companies’ investments to their local offices— reached $47 million net inflow in October, up from $20 million. As of October, equity capital amounted to $1.247 billion, up from $170 million.
Most equity placements came from the United States, Australia, the Netherlands, British Virgin Islands and Japan, BSP said.
Inflows were mainly channeled to the manufacturing, real estate, wholesale and retail, mining and quarrying, transportation and storage and financial and insurance sectors.
Likewise, reinvested earnings improved to $15 million from $8 million in October. For the first 10 months, this segment, however, at 52.3 percent drop to $136 million from a year ago.
Still on a net outflow are other capital account items, data showed. This segment reversed to a $24 million net outflow in October from $43 million net inflow a year ago. This put the year-to-date net outflow at $252 million.
“The turnaround in other capital accounts was due largely to resident companies’ repayments of intercompany loans and extension of trade credits to their direct investors,†the central bank said.
FDI is part of the country’s balance of payments, which measures the country’s capacity to service its foreign debts and meet its external obligations. Last year, FDI reached a net inflow of $1.26 billion.