Foreign direct investments into PH treble in October

A surge of equity capital inflows into the power sector trebled the level of foreign direct investments in the Philippines in October last year, according to the latest data from the Bangko Sentral ng Pilipinas.

The net inflows of foreign direct investments — investment inflows in the form of equity capital, reinvestment of earnings, and borrowings between affiliates — rose threefold in October 2017 to $2 billion from $670 million registered in the comparable period in 2016.

The BSP said the surge of capital was a reflection of “continued investor confidence in the country’s strong macroeconomic fundamentals and growth prospects.”

On a cumulative basis, foreign direct investment net inflows for the first 10 months of 2017 grew year-on-year by 20.5 percent to $7.9 billion. In particular, net equity capital investments increased by 54.7 percent to $2.6 billion as gross equity capital placements of $3.1 billion more than offset withdrawals of $465 million.

In October 2017, over three-fourths of foreign direct investment net inflows were in the form of equity capital, with gross placements rising markedly to $1.6 billion from $84 million a year ago. A significant portion of the equity capital placements were channeled to electricity, gas, steam and air-conditioning supply activities.

The other sectors that received investment inflows were manufacturing; construction; real estate; and wholesale and retail trade. The top country sources were the Netherlands, Singapore, Kuwait, the United States, and Germany, the BSP said.

Investments in debt instruments, or inter-company borrowings between foreign direct investors and their subsidiaries or affiliates in the Philippines, amounted to $431 million, lower by 22 percent than the previous year’s level.  Meanwhile, reinvestment of earnings reached $57 million during the month.

Gross equity capital placements for the first 10 months of 2017 came mostly from the Netherlands, the United States, Singapore, Japan and Hong Kong.

By economic activity, equity capital investments were channeled mainly to electricity, gas, steam and air-conditioning supply, manufacturing; real estate; construction; and wholesale and retail trade activities.

Non-residents’ net investments in debt instruments totaled $4.6 billion during the period, 8.5 percent higher than the level recorded during the comparable period in 2016. Reinvestment of earnings amounted to $662 million.