FDI inflows climb 61% to $4.9B in 9 months

The Bangko Sentral ng Pilipinas (BSP) registered $4.9 billion worth of foreign direct investments (FDI) for the first nine months of the year, up 61.3 percent year- on-year and surpassing the 2014 investments target.

The nine- month FDI numbers exceeded the BSP’s 2014 projection of $4.4 billion.

The BSP recently revised its external accounts projection for 2014, reversing the surplus balance of payments (BOP) estimate of $1.1 billion to a deficit position of $3.4 billion, affected by the normalization of monetary policy in the US. The projection for FDI as a component of the BOP is however retained at $4.4 billion for 2014.

The BSP said investors’ confidence in the sustainability of economic growth prospects spur continued FDI inflows.

“The significant rise in FDI during the period was driven by the sustained growth in investments in debt instruments,” noted the BSP yesterday.

The BSP's FDI monitoring covers actual investment inflows and is different from the way other government agencies and investment promotion agencies report FDI data which does not include investments where foreign ownership is at least 10 percent.

Investments in debt instruments increased by 54.5 percent year- on-year to $ 3.1 billion as of end- September. “This developed as a result of higher lending of parent companies abroad to their local affiliates to fund existing operations and business expansion plans in the country,” said the BSP.

For the nine-month tally, net equity capital inflows amounted to $1.1 billion, up by 77.3 percent. Data showed equity capital placements dropped by 27 percent to $1.6 billion while there was a decline of 69.7 percent to $475 million in equity capital withdrawals which amounted to $1.6 billion the same period in 2013.

“Equity capital investments in January to September—which came mostly from the United States, Hong Kong, Japan, Singapore, and Taiwan— were channeled mainly to the financial and insurance; manufacturing; real estate; wholesale and retail trade; and transportation and storage sectors,” said the BSP.

They also registered $650 million worth of reinvestment of earnings, which is higher by 70.3 percent compared to the 2013.

For the month of September alone, FDI net inflows totaled $680 million, 116 percent higher compared to the previous year’s $314 million.

According to the BSP, the said month’s FDI “reflects continued investor confidence in the country’s solid macroeconomic fundamentals.”

In September, the net inflows of equity capital amounted to $161 million from only $7 million in 2013, or up 2,067 percent. “This was due to the rise in equity capital placements by 252.4 percent to $178 million, coupled with the decline in equity capital withdrawals by 59.8 percent to $17 million,” explained the BSP.

Investments in debt instruments issued by local affiliates, consisting of intercompany loans, totaled $458 million for the month, 73.8 percent higher year- on-year. Reinvestment of earnings, in the meantime, totaled $61 million or 41 percent more than the previous year’s $43 million.