BSP reports $4.2-billion FDI inflows, up 94.9%
In first 6 months
The Bangko Sentral ng Pilipinas (BSP) said it registered $4.2 billion worth of foreign direct investments (FDI) as of end-June this year, higher by 94.9 percent compared to the same period in 2015 of $2.2 billion.
However, FDIs showed a net inflow of $238 million in June, down 41% from the $404 million posted in the year-earlier period. The BSP attributed the decline in foreign direct investments in June to lower reinvested earnings and equity capital investments. A surge in foreign investors' placement in the debt securities of their local companies failed to make up for the lower equity investment and reinvestment of earnings.
Equity investments in June showed an outflow of $5 million from an inflow of $215 million in the same month a year ago, while reinvested earnings declined to $62 million from $67 million in the year-earlier period. Investments in debt securities surged to $182 million compared with $122 million a year ago.
FDI components include actual investment inflows as equity capital, reinvestment of earnings, and borrowings between affiliates. The BSP data also include investments where ownership by the foreign enterprise is at least 10 percent.
The significant increase in the first-half FDI numbers continue to be backed up by investors’ confidence in the local economy – “(because of the) sound macroeconomic fundamentals and robust growth,” said the BSP.
The economy as measured in gross domestic product grew seven percent in the second quarter, sustaining the 6.8 percent growth in the first quarter. Full-year the government is aiming for a seven to eight percent GDP growth.
The BSP said investments of parent companies abroad in debt instruments issued by local affiliates – or intercompany borrowings – has “contributed a large part to the increase in FDI as these transactions more than doubled to $2.4 billion from $1.1 billion.” This is an increase 118 percent year-on-year.
Net equity capital also went up 112 percent year-on-year because of the combined effects of higher gross equity capital placements of $1.6 billion and the lower gross equity capital withdrawals of $166 million, explained the BSP. Last year, capital placements totaled $884 million while capital withdrawals amounted to $203 million.
The BSP said equity capital placements were sourced from Japan, Singapore, Hong Kong, the US, and Taiwan. “These were infused largely in financial and insurance; real estate; manufacturing; construction; and accommodation and food service activities.”
As for the reinvestment of earnings, this dropped 0.7 percent from $385 million in 2015 to $382 million end-June this year.
For the month of June, FDI posted $238 million of net inflows but this is lower compared to June 2015’s $404 million, or by 40.9 percent.
Equity capital placements of $36 million was also lower than the equity capital withdrawals of $41 million which the BSP said resulted in net outflows of $5 million from net inflows of $215 million for the same month last year.
Equity capital investments originated largely from Japan, the US, Singapore, Hong Kong, and China. “These infusions were channeled mainly to real estate; electricity, gas, steam and air-conditioning supply; information and communication; wholesale and retail trade; and manufacturing activities,” said the BSP.
Investments in debt instruments increased by 49.4 percent to $182 million from $122 million in 2015 while reinvestment of earnings decreased by 7.8 percent to $62 million from $67 million.