FDIs rise by 16.4% to $779M in Jan.-Aug.—BSP
MANILA, Philippines—The country cornered more foreign direct investments in the first eight months in what monetary officials credited to favorable domestic macroeconomic conditions even amid challenges confronting the global economy.
The Bangko Sentral ng Pilipinas said the increase in FDIs benefited a wide range of sectors as investor confidence for the country generally improved. Moreover, the investments came from a number of countries, both western and Asian.
“The respectable growth in FDI reflected favorable investor sentiment as the country’s macroeconomic fundamentals remained strong, amid a backdrop of a moderating and uneven global economic outlook,” the BSP said in a statement on Monday.
In a report accompanying the statement, the BSP said net inflow of FDIs in January to August amounted to $779 million, up by 16.4 percent from $669 million in the same period in 2010.
The latest net inflow came about as gross inflows reached $830 million, while outflows amounted to $51 million.
For June alone, net inflow of FDIs hit $64 million, rising by 28 percent from $50 million in the same month in 2010.
Sectors that benefited most from the increase in FDIs in the first eight months included real estate, manufacturing, mining and quarrying, financial and insurance activities, utilities, and wholesale and retail trade.
The investments came mostly from the United States, Japan, Hong Kong, Singapore and the Netherlands.
Officials said the growth in FDIs reflected the gradually improving appetite of foreign fund owners for long-term placements in the Philippines. Unlike portfolio investments that are easy to withdraw and are short term in nature, FDIs, such as those used to purchase machinery and equipment, are more difficult to liquidate.
The rise in FDIs was consistent with the improvement of the country’s global competitiveness ranking this year.
In the latest competitiveness report issued earlier this month by the World Economic Forum, the Philippines ranked as the 75th most competitive country among 142 countries evaluated. This marked a 10-notch improvement from 85th spot in 2010 and registered the biggest leap by a country in this year’s ranking.
Economic managers said the improved ranking was due largely to the favorable performance of the economy and reforms in governance.
The FDIs in the first eight months, however, paled in comparison with the latest recorded amount of foreign portfolio investments.
Data from the central bank showed that net inflow of foreign portfolio investments, which were mostly in the form of investments in stocks and bonds, amounted to $2.7 billion in January to July. This marked a 280-percent increase from the $701 million registered in the same period a year ago.
Economists said the gap between FDIs and foreign “hot money” indicated that the country should still do a lot in terms of convincing investors to do business in the Philippines over a long term.
