Foreign direct investments up 400%, hit $597M in April—BSP

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MANILA, Philippines—Job-creating foreign money continued to flow into the Philippines in April as the country’s growth prospects remained bright, despite financial market turmoil that sent short-term investors fleeing for safer havens.

The growth in foreign money was driven by multinationals lending money to their local subsidiaries and affiliates to fund the expansion of existing operations—a sign of continued confidence in the local economy.

“The sustained increase in net inflows continued to reflect strong investor confidence in the country’s solid macroeconomic fundamentals,” the Bangko Sentral ng Pilipinas (BSP) said Thursday.

Net inflows of foreign direct investments (FDI) reached $597 million in April, rising more than four-fold from year-ago levels, BSP data showed. For the first four months of the year, FDIs reached $2.4 billion, closing in on the BSP’s official forecast for the year of $2.6 billion.

FDIs are long-term placements by foreign investors in the Philippines. This comes in the form of significant investments in companies registered in the Philippines, lending of multinationals to their local affiliates, and the reinvestment of foreign firms’ local earnings.  FDIs usually fund the construction of new facilities or the purchase of new equipment, which helps create jobs locally.

In the same four-month period, foreign portfolio investments, or short-term placements in local equity and debt securities, stood at a net outflow of about $2 billion.

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