Foreign investments surged in October

Job-generating foreign investments continued to pour in last October as more businessmen from abroad chose to set up shop in the country, attracted by the economy’s strong performance.

Official documents released Monday showed that foreign direct investments (FDI), which come in the form of significant equity placements, advances by multinationals to local units and foreign firms’ earnings reinvested in local operations, more than doubled in October.

As a result, FDIs from January to October period of 2014 surged to a fresh record high, despite recent capacity constraints that threatened to choke capital formation onshore.

“The increase in FDI net inflows during the period was buoyed by favorable investor outlook on the Philippine economy on the back of sound macroeconomic fundamentals,” the Bangko Sentral ng Pilipinas (BSP) reported.

In October, FDI net inflows rose to $444 million, more than double the $219 million that came in during the same month the year before. This brought the 10-month total to $5.3 billion. This was already more than the country has ever booked in any single year.

Bulk of the placements during the month came in the form of equity capital, which totaled $213 million. This was about three times the $73 million booked the year before. Most of these investments came from investors from the United States, Germany, Singapore, United Kingdom and Japan.

Industries that benefited from these investments were manufacturing, real estate, financial and insurance, wholesale and retail trade, and services.

Loans granted by multinationals to their local subsidiaries rose by 74 percent to $168 million, while earnings reinvested by foreign firms rose 28.1 percent to $63 million.

Direct investments usually bankroll the construction of new facilities or foreign firms’ new or existing operations in the country. These are considered a better barometer for the confidence of international investors in the country because these placements tie them to the economy’s fortunes for the long term.

Since these investments fund business expansion, FDIs also result in the creation of new jobs.