Net foreign direct investments surge 66%

MANILA, Philippines - Net foreign direct investment inflows rose 66 percent to $254 million in October last year from $153 million in the same period in 2012 amid the country’s robust growth and favorable macroeconomic fundamentals, the Bangko Sentral ng Pilipinas reported yesterday.

“The notable rise in foreign investments into the country reflects favorable investor sentiment on the back of the country’s macroeconomic stability amid challenging global conditions,” the central bank said.

The economy expanded 7.4 percent in the first nine months of last year, faster than the government’s six- to seven-percent target. Inflation stood at an average of three percent in 2013, at the low end of the BSP’s three- to five-percent target range.

Central bank data showed net equity capital grew 19 percent to $68 million in October from $57 million in the previous year, while reinvested earnings plunged 44 percent to $50 million from $90 million.

Placements in debt instruments or borrowings made by local subsidiaries from the parent companies, meanwhile, surged to $135 million from $6 million.

Gross equity placements in October last year came from the US, Singapore, Switzerland, Hong Kong, and Taiwan. These funds went into manufacturing, transportation and storage, financial and insurance, real estate, and mining and quarrying.

In the first 10 months of 2013, net FDI inflows went up 35 percent to $3.361 billion from $2.485 billion in the same period in 2012.

Net equity capital placements slid 48 percent to $658 million from $1.273 billion, while reinvested earnings declined 33 percent to $586 million from $878 million.

Gross placements during the 10-month period came mainly from Mexico, Japan, the United States, British Virgin Islands, and Singapore. These were put into manufacturing, water supply, sewerage, waste management and remediation, financial and insurance, real estate, and arts, entertainment and recreation activities.

Placements in debt instruments, meanwhile, ballooned 534 percent to $2.117 billion from $334 million.

“Parent companies abroad continued to lend to their local subsidiaries/affiliates to fund existing operations and/or expansion of their businesses in the country, encouraged by the sustained growth performance of the economy,” the BSP said.

The central bank expects net FDI inflows to have reached $2.1 billion last year, slightly above the $2 billion recorded in 2012.

The December assumption is already a revised projection from the $2.2 billion announced in early 2013.