Foreign direct investments (FDI) continued to enter the Philippines at a steady pace as stable macroeconomic fundamentals remained a major draw for multinationals.
Documents from the Bangko Sentral ng Pilipinas (BSP) showed that the country continued to see net inflows of FDIs in June. FDI flows have been positive since the start of the year.
Net inflows mean more investments entered the Philippines than what went out during the period.
For June, however, FDI net inflows stood at $383 million, or down 30.9 percent year on year. This brought the year-to-date level to net inflows of $2.02 billion, down 40.1 percent from the same period in 2014.
The level at the end of the six months matched the amount of investments the country receives on average. From 2000 to 2014, average annual FDI net inflows to the Philippines stood at $2.1 billion.
The bulk of the net inflows during the month was in the form of equity capital investments, which amounted to $214 million, almost four times the $54 million in net inflows recorded in the previous year.
Equity capital placements came largely from the United States, Singapore, Germany, Japan and Taiwan. These were channeled mainly to manufacturing, real estate, wholesale and retail trade, administrative and support services, and information and communications activities.
Investments in debt instruments, or lending by parent companies abroad to their local affiliates to fund existing operations and business expansion, also registered net inflows of $102 million. Earnings amounted to $67 million during the period.
The level of FDIs received every year is seen as an indicator of the economy’s overall health because foreign investors are more likely to make bets on countries that perform better.
Apart from showing the country’s attractiveness as a safe harbor for investors, FDIs also contribute directly to job generation.
The Philippine economy grew at the third-fastest pace among major Asian markets in the second quarter of the year. Gross domestic product (GDP) expanded by 5.6 percent, improving from 5 percent in the January-to-March period.