11-mo. net foreign investments jump by 61.6%

AFP FILE PHOTO

MANILA, Philippines—Long-term, job-generating foreign investments rose to new heights in November as the country preserved its image as a safe bet, data released this week showed.

Data for January to November are in and 2014 is shaping up to be a banner year in terms of foreign direct investments (FDI) for the Philippines. The 11-month FDI is already more than double the annual average in the last four years.

“This reflected investors’ confidence in the Philippine economy on the back of sound macroeconomic fundamentals and strong growth prospects,” the Bangko Sentral ng Pilipinas (BSP), which tracks FDI data, said in a statement on Wednesday.

In November alone, FDI net inflows—or the difference between the money that came in and went out—rose by more than a third to $399 million. This brought the year-to-date figure to $5.72 billion—higher by 61.6 percent over the year before.

The amount of FDI recorded in January to November is already more than that recorded for any single year in the country’s history. It is also more than double the average of the preceding four years of $2.22 billion.

Should the streak stretch to December, the Philippines will have made ground in catching up with its neighbors like Indonesia and Thailand, which in 2013 attracted $18.4 billion and $13 billion in FDIs, respectively. In the same year, FDI inflows to the Philippines totaled just $3.9 billion.

Direct investments usually bankroll the construction of new facilities or the expansion of foreign firms’ new or existing operations in the country. These are considered a better barometer for the confidence of international investors in the country because these placements tie them to the economy’s fortunes for the long term.

In contrast, foreign portfolio investment or “hot money” flows, which come in the form of placements in stocks and bonds, are seen as a short-term barometer for sentiment towards the condition of the economy.

Data this week showed net equity capital placements surged by more than 28 times in November to $201 million. The increase was buoyed by the 129.6-percent rise in equity capital placements coupled by the 83.6 percent decline in equity capital withdrawals.

The bulk of equity capital investments was channeled to the finance and insurance, manufacturing, real estate, transportation and storage, and wholesale and retail sectors.

In the meantime, reinvestment of earnings and investments in debt instruments posted positive balances albeit lower than what were recorded during the same period a year ago. Specifically, investments in debt instruments contracted by 37.1 percent while reinvestment of earnings declined by 9.4 percent.