Foreign investments surged 123% in August

Long-term foreign investments in the country more than doubled in August as the Philippine economy shined as a bright spot amid dim conditions in both advanced and emerging markets.

Documents from the Bangko Sentral ng Pilipinas (BSP) showed that foreign direct investments (FDI), which are more tangible investments that are more likely to create new jobs, increased 123 percent year-on-year to $143 million in August.

“The significant rise in investments into the country reflects the positive outlook of investors on the Philippines’ economic prospects in spite of challenging global economic conditions,” the BSP said in a statement.

“Domestic economic prospects have been supported by sound macroeconomic fundamentals and a smoothly functioning financial system,” it added.

The Philippines had Southeast Asia’s fastest-growing economy in the first half of the year. Supported by robust consumer demand and higher government spending, gross domestic product (GDP) increased by 7.5 percent in the first semester, matching the performance of China, Asia’s largest market.

In its report, the BSP said inflows were observed in all three components that make up the final FDI figure.

Foreign placements in debt instruments, which refer to advances made by multinationals to their local subsidiaries, reversed to a net inflow of $47 million from an outflow of $44 million the month before, the BSP said.

“Parent companies abroad continued to lend to their local subsidiaries and affiliates to fund existing operations and expand their businesses in the country,” the BSP reported.

Instead of taking their profits back to their main offices, more multinationals also chose to reinvest the earnings of their Philippine subsidiaries for the expansion of their local operations. A net inflow of $54 million in reinvested earnings was booked during the eight-month period.

Net inflows of $42 million were also reported in the equity capital component, which are large acquisitions by foreign companies of shares in local firms. These equity capital placements mostly came from the United States, Singapore, United Kingdom, Japan and Germany.

These funds went mainly to companies in the financial and insurance, real estate, manufacturing, and information and communications technology sectors.