FDI flows gain 62% to $754 M in September

The central bank said it has registered $754 million of net foreign direct investments (FDI) in September, higher by 61.8 percent compared to same time in 2016 of $466 million.

A statement from the Bangko Sentral ng Pilipinas (BSP) said investment inflows increased significantly because of continued investor confidence in the country’s “strong macroeconomic fundamentals and high growth prospects.”

The January-September FDI however slipped to $5.8 billion compared to last year’s $5.9 billion, or down by 0.2 percent.

For the month of September, the BSP said the net equity capital investments were up by 31.8 percent to $182 million as” gross placements of $194 million more than offset withdrawals of $12 million.”

“Foreign capital infusion during the month came mostly from the US, Singapore, the Netherlands, China, and Japan. By economic activity, foreign equity capital placements were mainly invested in construction; professional, scientific and technical; manufacturing; real estate, and accommodation and food service activities,” said the BSP.

About $513 million of investments in debt instruments issued by local affiliates were registered during the month, it is up 75.2 percent year-on-year. Another $59 million were reinvestment of earnings during the period, which was higher than last year by 68 percent.

Year-to-date, the BSP said net equity capital recorded amounted to $1.1 billion which was lower compared to same time in 2016 of $1.6 billion.

According to the BSP, equity capital investments for the nine-month period were traced from investors based in the US, Singapore, Japan, the Netherlands, and Hong Kong. These funds were placed in these sectors: manufacturing; real estate; wholesale and retail trade; financial and insurance; and construction activities.

In the meantime, net investments in debt instruments rose by 13.1 percent to $4.2 billion end-September.

The BSP said $604 million were reinvestment of earnings during the period, up 10.4 percent year-on-year.

The central bank still expects net FDI will reach $8 billion for 2017, which was close to what was reported in 2016. The manufacturing sector is seen as the main beneficiary of these FDIs.

“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,” the BSP said in October. “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.