By Lee C. Chipongian
Net foreign direct investments (FDI) rose by 52.1 percent year-on-year from $4.38 billion to $6.67 billion as of end-July on strong investor confidence in the sustainability of Philippine growth.
The Bangko Sentral ng Pilipinas (BSP) reported that for the month of July alone, net FDI had a more significant growth of 165.5 percent to $914 million from same time in 2017 of $344 million.
“This reflected the continued positive investor sentiment on the Philippine economy on the back of strong macroeconomic fundamentals and growth prospects,” said the BSP.
BSP’s FDI covers actual investment inflows such as equity capital, reinvestment of earnings, and borrowing between affiliates.
The central bank said over sixty percent of net inflows were non-residents’ investments in debt instruments issued by local affiliates or intercompany borrowings. In July, this amounted to $584 million from $136 million last year, or up by 328.1 percent.
Net equity capital investments of $261 million was up by 90.2 percent year-on-year or from $137 million. According to the BSP, the higher amount “was on account of the 60.6 percent increase in equity capital placements to $278 million coupled with the decline in withdrawals by 52.3 percent to $17 million.”
In July, these equity capital placements came from investors based in Singapore, Taiwan, the US, Korea and Japan, and invested in these sectors: manufacturing; financial and insurance; real estate; wholesale and retail trade; and administrative and support service activities.
Also in July, reinvestment of earnings of $69 million was however down from last year’s $71 million.
For the January-July period, the BSP said the 52.1 percent increase in net inflows came from the expansion in net equity capital investments which grew by 445.9 percent to $1.84 billion from $338 million same time last year.
BSP data show gross equity capital placements went up by 197.5 percent to $2 billion while withdrawals dropped $180 million from $343 million.
Equity capital placements were sourced from Singapore, Hong Kong, Japan, the US and China. These funds were invested in these sectors: manufacturing; financial and insurance; real estate; arts, entertainment and recreation; and electricity, gas, steam and air-conditioning supply activities.
Investment in debt instruments likewise increased by 21.8 percent to $4.3 billion during the seven-month period, from $3.6 billion last year. Reinvestment of earnings also moved up though slightly to $489 million from $487 million.