Net foreign investment inflows up 1.6% in July

Long-term foreign investment inflows to the Philippines were steady in July as the country continued to attract businesses, owing to its strong macroeconomic fundamentals.

Data from the Bangko Sentral ng Pilipinas showed FDI net inflows in July were up slightly year-on-year. FDI flows to the Philippines have been positive every month since July 2013, according to the BSP.

At the end of July this year, FDI net inflows reached $458 million, up 1.6 percent from year-ago levels.

This brought the year-to-date level to $2.5 billion, which is above the Philippines’ annual historical average, but still behind last year’s seven-month total of $3.8 billion. Net inflows mean more investments entered the Philippines than what went out 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.

FDIs come in the form of new money being invested in the Philippines, lending by multinationals to local affiliates and subsidiaries, and multinationals’ reinvested earnings.

Net equity capital investments increased by 45.3 percent to $152 million on account of the $173-million rise in placements, which exceeded withdrawals of $21 million.

The bulk of the equity capital placements came from Singapore, Hong Kong, the United States, Japan and the United Kingdom.

By economic activity, investments were mainly channeled to the financial and insurance, mining and quarrying, real estate, manufacturing, and wholesale and retail trade sectors.

“Financial and insurance activities captured almost half of the increase in total equity capital placements during the period reflecting investors’ confidence in the country’s sound financial system,” the BSP said.

In addition, the reinvestment of earnings increased by 31.7 percent to $79 million. In the meantime, non-residents’ investments in debt instruments or inter-company borrowings, consisting mainly of loans extended by parent companies abroad to their local affiliates, were lower by 20.7 percent at $227 million from $286 million last year.