BSP sees $8 B in FDI in­flows this year

Manila Bulletin - - Business News - By LEE C. CHIPONGIAN

in­flows but year-to-date, still recorded net out­flows of $206 mil­lion, based on Bangko Sen­tral ng Pilip­inas (BSP) data.

The monthly hot money or spec­u­la­tive money re­versed the Au­gust, 2017’s net out­flows of $58 mil­lion and the same time last year’s $807 mil­lion with­drawals.

The nine-month for­eign port­fo­lio net out­flows how­ever were in con­trast to the $1.3 bil­lion net in­flows recorded in the Jan­uary-Septem­ber pe­riod last year.

The BSP said the end-Septem­ber out­flows were be­cause of do­mes­tic and in­ter­na­tional de­vel­op­ments such as the US Fed­eral Re­serve’s in­ter­est

The Bangko Sen­tral ng Pilip­inas (BSP) said it re­mains con­fi­dent that at the close of 2017, the coun­try will re­port to­tal net for­eign di­rect in­vest­ments (FDI) of $8 bil­lion.

It is the same es­ti­mate an­nounced mid-year and it has not changed de­spite re­port­ing a de­cel­er­ated FDI num­bers as of end-July of $3.9 bil­lion, down by 16.5 per­cent year-on-year.

“The BSP ex­pects the Philip­pines to sus­tain FDI in­flows this year, close to the $8 bil­lion level in 2016. Th­ese prospec­tive FDIs are ex­pected to be chan­neled mainly to the man­u­fac­tur­ing sec­tor (elec­tron­ics and mo­tor parts), which can help cre­ate em­ploy­ment and more growth op­por­tu­ni­ties,” a state­ment from the cen­tral bank yes­ter­day said.

“There is a huge po­ten­tial in at­tract­ing fur­ther FDIs, which can put the coun­try at par with the large lev­els of FDI seen in neigh­bor­ing Asian coun­tries,” it added. “Such po­ten­tial can be re­al­ized by re­form­ing the rules on for­eign own­er­ship, ad­dress­ing in­fra­struc­ture gaps, and re­duc­ing the cost of do­ing busi­ness.”

In 2016, net FDI reached $7.93 bil­lion, it was up 41 per­cent from the pre­vi­ous year. The BSP ear­lier re­leased a 2017 fore­cast of $7 bil­lion and they have re­vised this es­ti­mate last June and raised it to $8 bil­lion.

The BSP ex­plained that th­ese FDI sta­tis­tics are reg­u­larly dis­closed on both monthly and yearly ba­sis. “Year-on-year growth rates can be af­fected by the tim­ing of en­try of big ticket items, with re­sult­ing base ef­fects. Thus, the monthly pro­file of FDI flows can be volatile and may not ex­hibit a smooth up­ward trend due to its lumpy na­ture.”

The BSP fur­ther noted that “prospects for in­ward flows of FDI into the coun­try con­tinue to be fa­vor­able as both ‘push’ (sub­dued global eco­nomic growth) and, more im­por­tantly ‘pull’ (sus­tained ro­bust macroe­co­nomic per­for­mance and in­vest­ment grade sta­tus) fac­tors re­main.”

Pub­lic and mar­ket re­ac­tions on the de­clin­ing FDI seemed to have con­vinced the BSP to is­sue an­other state­ment the day af­ter re­leas­ing data on both Septem­ber and end-Septem­ber FDI. For Septem­ber alone, net FDI in­flows fell by 37.9 per­cent year-on-year.

FDIs as reg­is­tered by the BSP are ac­tual in­vest­ment in­flows as eq­uity cap­i­tal, rein­vest­ment of earn­ings and bor­row­ings between af­fil­i­ates.

The BSP said there have been sev­eral mea­sures adopted to im­prove the coun­try as FDI des­ti­na­tion. Th­ese in­cludes the lib­er­al­iza­tion of for­eign bank en­try in the coun­try which was ap­proved in July of 2014 and the re­vi­sions in the for­eign ex­change pol­icy since 2007. “The BSP will con­tinue to pro­mote an en­abling en­vi­ron­ment for in­vest­ments to thrive in line with its pri­mary man­date of main­tain­ing price and fi­nan­cial sta­bil­ity,” it said.

Ear­lier, the coun­try’s for­eign port­fo­lio in­vest­ments im­proved in Septem­ber with $113-mil­lion net rate ac­tions, global ter­ror­ist at­tacks, North Korea’s nu­clear mis­sile test­ing and the clo­sure or­der for sev­eral min­ing com­pa­nies in the coun­try ear­lier in the year.

Ac­cord­ing to the BSP state­ment, for the month of Septem­ber, reg­is­tered hot money was at $1.3 bil­lion, 38.5 per­cent higher year-on-year or from $936 mil­lion and 1.8 per­cent more than $1.27 bil­lion of the pre­vi­ous month.

“This may be at­trib­uted to in­vestor re­ac­tion to the ex­ten­sion of the debt limit dead­line in the US, and the Philip­pine Sen­ate’s ap­proval of the first pack­age of the govern­ment’s tax re­form pro­gram,” said BSP.

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