BSP reports 42.4% hike in FDI inflows to $5.8 B in first half

The country’s net foreign direct investments (FDI) climbed to $5.8 billion for the first six months of the year, up by 42.4 percent from $4 billion same time in 2017, the Bangko Sentral ng Pilipinas (BSP) reported Monday.

The BSP said the “continued inflows of FDI indicate investor confidence in the Philippine economy on the back of strong macroeconomic fundamentals and growth prospects.” This is also despite the high inflation environment and weak peso.

FDI covers actual investment inflows such as equity capital, reinvestment of earnings, and borrowings between affiliates. For the month of June alone, net FDI increased by 9.2 percent to $831 million from $761 million in June of last year. The BSP said this was “largely on account of nonresidents' net equity capital investments of $184 million during the month, which was a turnaround from the $67-million net withdrawals in June 2017.”

The BSP also noted that the net equity capital investments improved because of a 83.6 percent expansion in gross placements of equity capital of $208 million versus withdrawals of $24 million.

These placements came from investors in Singapore, Luxembourg, Japan, the US and the Netherlands, and placed in sectors such as: Manufacturing; electricity, gas, steam and air conditioning supply; real estate; financial and insurance; and wholesale and retail trade activities.

In June, $569 million worth of non-residents' investments in debt instruments issued by their local affiliates (intercompany loans) were registered. This was 24.6 percent lower than the $756 million same period in 2017. Reinvestment of earnings amounting to $77 million was up 7.1 percent year-on-year.

For the January-June period, the BSP said nonresidents' net investments of equity capital surged by 688 percent to $1.6 billion from just $201 million a year ago. “This emanated mainly from the 244.1 percent surge in equity capital placements to $1.7 billion, alongside the 46.9 percent decrease in withdrawals to $163 million,” said the BSP.

Investors from Singapore, Hong Kong, China, Japan, and the US sent most of the equity capital registered by the central bank. 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.

The six-month investments in debt instruments went up by 9.6 percent yearon-year to $3.8 billion while reinvestment of earnings also increased but only by 0.8 percent to $420 million from $416 million.

The central bank expects net FDI of $9.2 billion for 2018. They raised the forecast in June from the previous $8.2 billion in anticipation of higher domestic growth, geared-up infrastructure program and improved investor outlook for the Philippines.

In 2017, the BSP registered a record $10 billion worth of net FDIs, which was 21.4 percent more than 2016 data.

The BSP added that the expected improvement in global economic conditions and the implementation of the government’s growth-inducing public-private partnership projects will boost foreign capital investments.