Foreign investments hit all-time high in ’14

Bangko Sentral ng Pilipinas. INQUIRER.net FILE PHOTO

MANILA, Philippines–Long-term foreign investments in the Philippines rose last year to its highest level in history as the country reaped the benefits of its recent turnaround into one of the region’s growth leaders.

The Bangko Sentral ng Pilipinas (BSP) said foreign direct investments (FDIs) rose more than fivefold in December alone, marking the 18th consecutive month that net inflows were recorded.

“FDI inflows remained robust, buoyed by strong investor confidence in the country’s solid macroeconomic fundamentals,” the central bank said in a statement on Tuesday.

Last December, FDI net inflows rose to $557 million from $102 million in the same month the year before. For all of 2014, net inflows reached $6.2 billion, up by two-thirds from 2013’s $3.7 billion. Net inflows meant there were more investments than divestments by foreigners.

Direct investments usually bankroll the construction of new facilities or the expansion of 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.

FDIs come in the form of equity placements in local companies and investments and loans by multinationals to their local affiliates and subsidiaries.

Total investments for 2014 were higher than the average of $2.2 billion in the four preceding years from 2010 to 2013.

Of Southeast Asia’s five biggest economies, the Philippines has historically received the least FDIs. In 2013, Singapore received the most with $60.6 billion, followed by Indonesia ($18.4 billion), Thailand ($12.99 billion), and Malaysia ($12.29 billion), according to data from the Association of Southeast Asian Nations (Asean) secretariat.

The increase in net equity capital investments was brought by the 1,465.7 percent expansion in equity capital placements and the 10.7-percent decline in equity capital withdrawals, resulting in net equity inflows of $482 million.

The bulk of equity capital investments in December 2014—coming largely from the United States, Hong Kong, United Kingdom, South Korea and Singapore—went to financial and insurance, mining and quarrying, real estate, manufacturing and information and communication sectors.

Reinvestment of earnings increased by 21.7 percent to $56 million from $46 million.