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Net foreign direct investments reach $1.5B

/ 01:11 AM July 11, 2013

LONG-TERM investments by foreigners in the Philippines rose by more than half in April, reflecting the country’s favorable business climate and stable economic conditions.

The Bangko Sentral ng Pilipinas (BSP) on Wednesday reported that foreign direct investments (FDI) reached a net inflow of $202 million for April, up 61 percent year-on-year. The net inflow for April was a reversal from the $78 million in FDI capital that left the country the month before.

This brought the year-to-date level to a net inflow of $1.5 billion, roughly just slightly lower than the level in the same four-month period in 2012.


The real estate, manufacturing and mining sectors continued to attract bulk of the foreign money that entered the country, the BSP said, adding that financial and insurance services were also major draws.

Bulk of the investments came from investors from the United States, United Kingdom, Hong Kong, Singapore and multilateral lenders.

FDIs are considered a more reliable indicator of the country’s attractiveness as an investment destination. Unlike placements in local stocks, bonds and government securities—often referred to as “hot money”—FDI capital is considered more stable since this cannot be pulled out as easily on the whims of fund managers.

Large investments in local corporations, the reinvestment of earnings made by multinational corporations in the country and loans extended by foreign firms to their local affiliates are counted as FDIs.

The BSP said reinvested earnings reached a net inflow of $64 million “as foreigners opted to retain their earnings locally on the expectation of sustained strong corporate performance.”

Borrowings among foreign firms and local subsidiaries reached a net inflow of $7 million—the same level as last year, the BSP said.

“Parent companies abroad continued to lend funds to their local subsidiaries to sustain existing operations or expand their businesses in the (Philippines),” the BSP said.

The biggest component came from equity investments, which grossed at $189 million during the month, more than sevenfold the $26 million recorded in April 2012. Gross investments were slightly offset by the $58 million in investment withdrawals, the BSP said. Paolo G. Montecillo


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