FDI inflows exceed 2017 goal with December figure still untallied

Foreign direct investments into the country in the first 11 months of 2017 exceeded the full year target as local units for overseas firms benefited from the inflow of capital to fund their expansion plans, the Bangko Sentral ng Pilipinas said on Monday.

As a result of these developments, FDI recorded net inflows of $8.7 billion during the period January-November 2017, exceeding the $8 billion projection for 2017.

“The sustained FDI inflows reflected investor confidence given the Philippine economy’s solid macroeconomic fundamentals and growth prospects,” BSP Gov. Nestor Espenilla Jr. said in a statement.

The BSP said that total FDI increased to $869 million at the end of November 2017, representing a 16.9-percent increase over the figure reported in the same period of 2016.

“This was due mainly to the 13.1-percent expansion in non-residents’ net placements in debt instruments issued by local affiliates (classifgied as intercompany borrowings) to reach $604 million,” he explained.

Net equity capital inflows likewise grew by 38.7 percent to $210 million, as equity capital placements of $228 million more than offset the $18 million withdrawals.

The bulk of gross equity capital investments came from Singapore, Hong Kong, Luxembourg, China, and the United States.

These were channeled mainly to the following areas:

• manufacturing
• real estate
• electricity, gas, steam and air-conditioning supply
• construction
• wholesale and retail trade activities

Meanwhile, reinvestment of earnings amounted to $56 million during the month.

The net FDI rose by 20.1 percent year-on-year, driven largely by the 9 percent growth in net placements in debt instruments to $5.2 billion.

Net investments in equity capital reached $2.8 billion from $1.8 billion in the comparable period in 2016, on account of the combined effect of higher equity capital placements ($3.3 billion from $2.4 billion) and lower withdrawals ($483 million from $555 million).

Equity capital infusions during the period were sourced mainly from the Netherlands, the United States, Singapore, Japan, and Hong Kong.

These placements were invested largely in the following areas:

• gas
• steam and air-conditioning supply
• manufacturing
• real estate
• construction
• and wholesale and retail trade activities

Reinvestment of earnings reached $717 million.

BSP statistics on FDI covers actual investment inflows, which could be in the form of equity capital, reinvestment of earnings, and borrowings between affiliates.

In contrast to investment data from other government sources, the BSP’s FDI data include investments where ownership by the foreign enterprise is at least 10 percent.

Meanwhile, FDI data of investment promotion agencies (IPAs) do not make use of the 10 percent threshold and include borrowings from foreign sources that are non-affiliates of the domestic company.

Furthermore, the BSP’s FDI data are presented in net terms (that is, equity capital placements less withdrawals), while the IPAs’ FDI do not account for equity withdrawals. /atm