MANILA, Philippines -- (UPDATE) The country attracted $2.93 billion worth of net foreign direct investments in 2007, just a tad higher than the $2.92 billion investment chalked a year ago, this despite the high-growth, low-inflation environment seen last year.
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. reported Monday that new foreign equity capital went up by 52.6 percent to about $2 billion over a year ago, while reinvested earnings also rose by 16.9 percent to $567 million as foreigners plowed back a portion to their local companies.
He said these increases were offset by some outflows from the settlement of loans obtained from parent companies abroad. However, the net outflow from this account declined by 69.3 percent to $341 million.
Unlike the more volatile portfolio investments, FDIs represent investments in bricks-and-mortar businesses that are usually capital- and labor-intensive, such as factories, power plants, mining ventures, business process outsourcing or other enterprises.
Bulk of the FDI inflows came from Japan, the US, the UK, Germany, South Korea, Malaysia and Hong Kong.
?These were channeled into manufacturing, services, construction, mining, real estate, financial intermediation and agricultural industries,? Tetangco said.
The manufacturing sub-sectors that attracted fresh FDI inflows were those into electronics, health and chemical products, food, automotive sensor and safety products, decorative crafts and molded plastic products and cleaning products.
The services sub-sectors that received investments last year were those in international courier, information technology development and multimedia.
For the month of December, net FDI inflow amounted to $137 million, down 11.6 percent from a year earlier. The modest increase of just $7 million in net FDIs last year was due to the repayment of inter-company loans, the BSP (central bank) said.
Strong inflows helped the peso strengthen nearly 19 percent against the US dollar last year, making it one of Asia's best-performing currencies, while inflation averaged 2.8 percent, the lowest annual average in 21 years.
The government also managed to trim its budget deficit to P9.24 billion in 2007, substantially lower than the deficit of P64.8 billion recorded in the previous year, keeping it on track to achieve a balanced budget this year. With a report by Enrico dela Cruz of Thomson Financial