FDI inflows soar 53% to $1.5 B in 2 months

Strong investor confidence in the country’s sound macroeconomic fundamentals translated to a 53 percent jump in foreign direct investments (FDIs) in the first two months of the year, the Bangko Sentral ng Pilipinas (BSP) reported Thursday.

Data released by the central bank showed FDI inflows reached $1.49 billion in January and February this year, $515 million higher than the $978 million recorded in the same period last year.

“The sustained investment inflows reflect investor confidence in the country’s sound macroeconomic fundamentals and growth prospects,” BSP Governor Nestor Espenilla Jr. said in a statement.

The government Thursday reported that the country’s gross domestic product (GDP) growth accelerated to 6.8 percent in the first quarter from the revised 6.5 percent in the fourth quarter of last year despite the drag from rising inflation.

Had inflation remained benign, the country’s GDP expansion would have reached seven percent, within the seven to eight percent target penned by economic managers. The Philippines has booked 77 quarters of uninter- rupted growth.

Equity placements reached $645 million in the first two months of the year, more than four times the $150 million recorded in the same period last year.

Capital came from Singapore, China, Hong Kong, Taiwan, and Japan. These were channeled mainly to manufacturing; financial and insurance; real estate; art, entertainment and recreation; and electricity, gas, steam and air-conditioning supply activities.

On the other hand, withdrawals jumped 150 percent to $76 million from $30 million.

In particular, net investments in debt instruments or lending by parent firms abroad to their local affiliates reached $793 million, representing a 10 percent growth from $722 million recorded in the same period last year.

Reinvestment of earnings slipped 5.2 percent to $130 million in the first two months of the year from $137 million in the same period last year.

For the month of February alone, the BSP said FDI inflows jumped 46.4 percent to $573 million from $392 million in the same period last year.

Equity placements primarily from Hong Kong, the United States, China, the Netherlands, and Japan surged 44.3 percent to $114 million from $79 million, while withdrawals inched up 3.7 percent to $18 million from $17 million.

This was due mainly to the 56.3 percent growth in investments in debt instruments or intercompany borrowings between foreign direct investors and their subsidiaries or affiliates in the Philippines, amounting to $412 million from $264 million.

Meanwhile, reinvestment of earnings slipped 1.7 percent to $65 million from $66 million.

The Philippines has booked record FDI inflows for two consecutive years at $10.05 billion last year from $8.28 billion in 2016. The BSP expects FDIs to hit $8.2 billion this year.

Socioeconomic Planning Secretary Ernesto Pernia said during the Philippine Economic Briefing held at the Clark Freeport Zone last month the country is seen cornering a record $12 billion in FDI inflows this year amid the strong macroeconomic fundamentals and massive infrastructure build up under the Build Build Build program.

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