FDI rise 20%, breach $8-B target

The net inflow of foreign direct investments (FDIs) jumped 20 percent to $8.7 billion from January to November last year, exceeding the full-year 2017 target of $8 billion set by the Bangko Sentral ng Pilipinas (BSP).

The BSP said the strong inflows could be traced to the country’s sound macroeconomic fundamentals.

“The sustained FDI inflows reflected investor confidence given the Philippine economy’s solid macroeconomic fundamentals and growth prospects,” the BSP said.

The economy expanded 6.6 percent in the fourth quarter of last year from the revised seven percent in the third quarter.

Economic managers expect growth for the Philippine economy to hover between seven and eight percent this year from 6.7 percent last year.

BSP Governor Nestor Espenilla Jr. said the country’s high growth would continue and the target range of seven to eight percent between 2018 and 2022 would be achieved.

“The current economic landscape is healthy and robust. It is ripe and ready to receive our added investments of time, energy, creativity and resources,” he said.

Espenilla said foreign investors have shown an increased interest in the Philippines as the government is actively increasing the country’s competitiveness by building infrastructure, promoting the ease of doing business, and lifting restrictions on foreign ownership for certain industries.

The net inflow in the first 11 months of last year was 20.1 percent higher than the $7.26 billion recorded in the same period in 2016.

Data showed equity placements rose 37.9 percent to $3.29 billion in the first 11 months of last year from a year-ago level of $2.38 billion. The equity infusion from the Netherlands, the US, Singapore, Japan and Hong Kong were channeled to gas, steam and air-conditioning supply; manufacturing; construction; real estate; and wholesale and retail trade activities.

On the other hand, withdrawals declined 13.1 percent to $483 million from $555 million.

The BSP said non-residents’ investments in debt instruments or lending by parent firms abroad to their local affiliates increased nine percent to $5.2 billion from $4.77 billion while reinvestment of earnings inched up 8.2 percent to $717 million from $663 million.

For the month of November alone, the BSP said net FDI inflows went up 16.9 percent to $869 million from $744 million as equity placements fell 47.6 percent to $228 million from $434 million while withdrawals plunged 93.8 percent to $18 million from $283 million.

Finance Secretary Carlos Dominguez earlier said the $1.3-billion deal between Energy Development Corp. and the consortium of Macquarie Infrastructure and Real Assets and Arran Investment Pte. Ltd. as well as the $1-billion acquisition of Bulacan-based Mighty Corp. by Japan Tobacco would boost FDIs this year.

For this year, the BSP sees FDIs rising to $8.2 billion from the projected $8 billion in 2017.

Inflows from FDIs, remittances, exports, tourism receipts as well as business process outsourcing sector help build up the country’s gross international reserves that serve as buffer against external shocks.