BSP sees $8 B in FDI inflows this year
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.