Foreign direct investments up 55% in Jan-Nov 2013 period

CEBU, Philippines - Philippine foreign direct investment (FDI) flows increased by 54.9 percent in the first eleven months of 2013.

Latest report released by the Bangko Sentral Ng Pilipinas (BSP) revealed that the country registered a total ofUS$286 million worth of FDI inflows during the period, compared to US$185 million recorded in the same period of 2012.

This developed as parent companies abroad were encouraged by the sustained growth of the Philippine economy and thus continued to lend to their local subsidiaries/affiliates to fund existing operations and/or expansion of their businesses in the country.

The gross placements of equity capital of US$2.4 billion more than offset withdrawals of US$1.7 billion, this resulted in net inflows of equity capital of US$665 million during the period.

The bulk of gross equity capital placements—which originated primarily from Mexico, Japan, the United States, British Virgin Islands, and Singapore—were channeled mainly to manufacturing, water supply, sewerage, waste management and remediation; financial and insurance, real estate and arts, entertainment and recreation activities.

FDI inflows remained robust on the back of sustained investor confidence in the growth prospects of the Philippine economy.

The significant rise in the net FDI bolstered by non-residents’ net placements in debt instruments issued by local affiliates, increasing by more than two-fold to reach US$225 million during the period from US$108 million in the previous year.

Moreover, net equity capital inflows reached US$7 million, a reversal of the US$21 net equity capital inflow posted during the same period last year, as gross placements of US$94 million more than offset withdrawals of US$87 million in November 2013.

Gross equity capital placements—sourced mostly from the United States, Japan, the United Kingdom, Hong Kong, and Singapore—were channeled mainly to manufacturing, electricity, gas, steam and air-conditioning supply, real estate, mining and quarrying, and wholesale and retail trade activities.

Meanwhile, re-investment earnings aggregated US$55 million in November last year.

On a cumulative basis, net FDI inflows for the first eleven months of 2013 likewise grew strongly, rising by 36.6 percent to reach US$3.6 billion from US$2.7 billion posted in the same period in 2012.

In particular, non-residents’ net placements in debt instruments increased by more than five-fold to US$2.3 billion, accounting for about two-thirds of FDI during the January-November 2013 period.

Meanwhile, re-investment of earnings reached US$641 million in January to November last year.

On the other hand, in a separate interview with Philippine Economic Zone Authority (PEZA) director general Lilia de Lima, she said that the country will continue to attract more FDIs in the next couple of years, as foreign investors’ have seen the country’s strong growth fundamentals, strengthened by the series of impressive upgrades by the global financial institutions and analysts.

In the economic zones alone, there were 677 new projects registered last year, about 80-85 percent of which are foreign direct investors, De Lima said.

While most FDI inflows are put into equities, debt instruments, among others, De Lima said the Philippines is also working hard to attract more global manufacturing companies to set up plants in the country, in order to balance the distribution of economic opportunities, such as electronics, shipbuilding, car assembly plants, among others.  (FREEMAN)