Inflows of FDI improved in February

More foreign investors made long-term bets on the country’s economic prospects in February, data this week showed, improving prospects for the creation of more jobs.

Foreign direct investments (FDI) for the month rose by nearly a fifth over the same period the year before on the back of higher equity capital entering the country.

This increase more than offset declines recorded in other types of direct investments, namely, lending and reinvestment of earnings of multinational companies.

The bulk of these equity capital investments came from the United States, Spain, the United Kingdom, Japan and Singapore.

Areas such as manufacturing, electricity, gas, steam, air conditioning supply, finance, transportation and research and development were the main beneficiaries.

In February, net inflows of FDIs rose to $359 million from $305 million the year before. The Philippines remained behind last year’s pace as FDIs for the first two months of 2015 stood at $622 million, about half the 2014 level.

Non-resident investments in Philippine debt instruments—the BSP’s term for multinationals lending to local subsidiaries —declined by 29.5 percent to $122 million.

Reinvested earnings by these same multinationals, which are considered FDIs because this was money spent here instead of being repatriated, were down 15.9 percent to $58 million.

FDIs are considered long-term endorsements by foreign companies for the country’s economic prospects. And because this money is normally spent building new offices or buying new machines for factories, FDIs also lead to the creation of more jobs.

Last year, net inflows of FDIs reached $6.2 billion, up by two-thirds compared to 2013’s $3.7 billion. Net inflows mean there were more investments than divestments made by foreigners.

Total investments for last year 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 amount of 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).