September FDI soars to record $1.5 B

MANILA, Philippines - Net foreign direct investment (FDI) soared to a new record high of $1.52 billion in September, reflecting the country’s strong macroeconomic fundamentals, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP Governor Amando Tetangco Jr. said FDIs surged 123.4 percent to $1.52 billion in September from $680 million in the same month last year on the back of the country’s sustained gross domestic product (GDP) growth, benign inflation environment, healthy foreign exchange reserves, and stable foreign exchange rate.

“The surge in FDI inflows in September 2015 reflects investor confidence in the country’s strong macroeconomic fundamentals,” Tetangco said.

The country’s GDP growth accelerated to six percent in the third quarter from the revised 5.8 percent in the second quarter amid robust domestic demand and improving government spending.

This brought the GDP expansion to 5.6 percent in the first nine months, way below the seven to eight percent target penned by economic managers for this year.

On the other hand, inflation kicked up to 1.1 percent in November from a record low of 0.4 percent in October due to a sharp increase in food prices.

Inflation averaged 1.4 percent in the first 11 months, below the two percent to four percent target set by the BSP.

Tetangco traced the record FDI inflows in September to the sharp increase in equity placements.

“This developed as a result of the notable increase in non-residents’ investments in equity capital and debt instruments issued by their local subsidiaries or affiliates,” he added.

The BSP reported yesterday equity placements surged 546.1 percent to $1.15 billion in September from $178 million in the same period last year, while withdrawals soared 3,087 percent to $789 million from $17 million.

The BSP chief said the bulk of equity capital placements came from the United Kingdom, the Netherlands, Japan, US, and Germany.

By economic activity, he explained equity capital investments were channeled mainly to manufacturing; financial and insurance; construction; wholesale and retail trade; and real estate activities.

On the other hand, earnings of foreign companies operating in the Philippines and plowed right back into the country retreated 17.1 percent to $51 million in September from $61 million in the same month last year.

The BSP said intercompany borrowings from foreign direct investors by their subsidiaries or affiliates in the Philippines helped offset the sharp drop in equity placements and higher withdrawals in September.

Data showed non-residents’ net investments in debt instruments including net intercompany borrowings particularly in the transportation and storage as well as construction industries jumped 89.7 percent to $869 million from $458 million.

For the first nine months, net FDI inflow reached $4.54 billion, 5.5 percent lower compared to $4.8 billion in the same period last year.

Equity capital investments reached $1.4 billion on account of the 38.1 percent increase in gross placements to $2.2 billion, which exceeded withdrawals amounting to $789 million.

Equity infusions emanated largely from the US, Japan, the United Kingdom, the Netherlands, and Singapore and were channeled mainly to manufacturing; financial and insurance; real estate; wholesale and retail trade; and construction activities.