Jan-April direct investments into PH surge 24%, says BSP

Foreign direct investments for the January-April 2018 period registered net inflows of $3.2 billion, representing a growth of 24.3 percent from the comparable period in 2017, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.

In a statement, the central bank said investment inflows were boosted by continued favorable investor sentiment on the back of the country’s solid macroeconomic fundamentals and growth prospects.

Net equity capital investments grew by more than five times to $1.1 billion from $199 million last year as gross placements of $1.3 billion more than offset the withdrawals of $124 million.

Equity capital placements during the period were sourced largely from Singapore, Hong Kong, China, Japan, and the United States. These were infused primarily into manufacturing; financial and insurance; arts, entertainment and recreation; real estate; and electricity, gas, steam and air-conditioning supply activities.

Debt instruments amounted to $1.8 billion, lower by 14.5 percent than $2.1 billion recorded in the comparable period last year. Meanwhile, reinvestment of earnings reached $268 million in the first four months of 2018.

For the month of April 2018 alone, foreign direct investments yielded net inflows of $1 billion as positive balances were recorded for all investment components during the month.

The bulk of net inflows for the fourth month of the year came in the form of debt instruments or lending by foreign companies abroad to their local affiliates to fund existing operations and business expansion), which amounted to $705 million.

Net investments in equity capital amounted to $247 million as gross equity capital placements increased more than three times to $262 million from $84 million, while withdrawals remained broadly low at $15 million.

Equity capital placements emanated largely from Singapore, Hong Kong, Netherlands, the United States and Japan. These were mainly invested in manufacturing; arts, entertainment and recreation; real estate; financial and insurance; and wholesale and retail trade activities.

Meanwhile, reinvestment of earnings by non-resident investors amounted to $75 million during the period.

BSP statistics on foreign direct investments cover actual 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 data include investments where ownership by the foreign enterprise is at least 10 percent.

Meanwhile, FDI data of investment promotion agencies 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 data are presented in net terms (i.e. equity capital placements less withdrawals), while other agencies’ tallies do not account for equity withdrawals. /jpv