MANILA, Philippines—Long-Term investments in the Philippines by foreigners rose to over $1 billion in January, indicating sustained confidence in the country’s economic prospects.
The Bangko Sentral ng Pilipinas (BSP) on Thursday reported that foreign direct investments (FDI) rose by 5.3 percent in January, a turnaround from the 7.9-percent contraction in the same month last year.
“This was due to the continued lending of parent companies abroad to their local affiliates to fund existing operations and the expansion of their businesses in the country, an indication of sustained confidence in the country’s strong macroeconomic fundamentals,” the BSP said in a statement.
FDIs are investments for the purchase of new equipment and the expansion of foreign businesses in the Philippines, which contributes to job creation in the country.
Foreign firms’ loans to their local affiliates reached $687 million in the month, up 7.3 percent year-on-year. This accounted for 67 percent of the total, the BSP said.
Net equity capital inflows, or new investments in local firms, rose by 10.5 percent to $278 million in January from $252 million in the same period last year.
These equity placements came mainly from Hong Kong, the United States, Japan, Singapore and the United Kingdom. Most investments went into the financial, wholesale and retail, real estate, manufacturing, and information and communications sectors.
Reinvested earnings of multinationals in the country reached $62 million, down 26.3 percent year-on-year.
The BSP noted that the increase in direct investments came despite significant outflows in short-term foreign portfolio investments or “hot money.”
A $1.8-billion net outflow in hot money was registered in January, the highest outflow in a single month on record. This was a result of foreign funds’ repatriation amid recovering economic conditions in the United States.
This capital flight was prompted by the US Federal Reserve’s scaling back of its monetary stimulus for the American economy.—Paolo G. Montecillo