FDIs close in on 2017 goal with Oct. surge

NET foreign direct investment (FDIs) flows to the Philippines soared in October, logging the biggest amount in one-and-a-half years that brought the official 2017 target within reach.

Net FDI inflows totaled $2.017 billion that month, triple the $ 670 million that entered the country in October 2016. October’s amount also jumped from the $754 million recorded in September 2017, the Bangko Sentral ng Pilipinas (BSP) said yesterday.

October’s net inflow is the biggest since the record $2.244-billion investments recorded in April 2016 and marks the third straight month of year- on-year growth.

“The upswing in FDI reflects continued investor confidence in the country’s strong macroeconomic fundamentals and growth prospects,” the central bank said in a statement.

FDIs are a key source of capital for the local economy, which create more jobs for Filipinos as these fuel business expansion.

October saw President Rodrigo R. Duterte declaring the liberation of Marawi City after five months of battle between government forces and Islamic State- inspired militants, although Mindanao remains under military rule to this day.

Net equity placements fueled October’s surge, ballooning to $1.529 billion, 25 times the $60 million recorded in October 2016.

Gross equity inflows reached $1.595 billion, eclipsing $84 million recorded the past year, while total outflows more than doubled to $66 million from $23 million.

A “significant” portion of October’s equity capital investments went to electricity, gas, steam and air- conditioning supply activities, the BSP said. Among others, a consortium backed by Singapore’s GIC Pte Ltd. completed that month its acquisition of a 31.7% stake in Energy Development Corp. for $1.3 billion.

Other industries which got additional investments were manufacturing, construction, real estate, as well as wholesale and retail trade, the central bank added.

Surging net equity investments offset the 22% drop in intercompany lending to $ 431 million from $553 million in the same comparative months.

Reinvested earnings steadied at $57 million.

The Netherlands, Singapore, Kuwait, the United States and Germany were the biggest sources of foreign capital that month, according to central bank data.

The October haul brought year-to-date FDI net inflows to $7.856 billion, a fifth more than the $ 6.52 billion recorded in 2016’s comparable 10 months.

This brings the FDI haul closer to the central bank’s $ 8- billion projection for the entire 2017 and may even surpass 2016’s $7.93-billion net inflows.

“With investor general sentiment about the Philippines favorable, I expect the government FDI target to be smashed as the November and December data are released in the next two months,” Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said when sought for comment.

“[ S] ophisticated investors are looking at the country and are waiting for opportunities to invest, whether direct or mere transitory investing… I can say that these interests are real and are being translated to actual long-term investments.”

BSP Governor Nestor A. Espenilla, Jr. has said that the Philippines’ infrastructure spending program as well as warmer ties with China and Russia will help fuel stronger foreign investment inflows, enough to mark another banner year.