FDI up11.4% to $430M in Q1

Foreign direct investments (FDI) went up by 11.4 percent in the first quarter of the year, hitting $430 million due mainly to investments into banking and manufacturing, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

The BSP said that in March alone, foreign direct investments or FDIs remained in surplus at $75 million. The amount, however, was 27.9 percent lower compared to $104 million in the same period last year.

The BSP said that the growth in total

FDI during the first quarter was due to the net capital infusion in long-term equity investments which rose by 47.3 percent.

According to the BSP, inflows were channeled largely to the banking, manufacturing, construction and real estate sectors.

As a result, the first quarter inflow resulted to a net surplus albeit much smaller than the dramatic 1,708 percent growth recorded over the same period last year when FDIs were recovering from a major decline in 2004.

The BSP said the continued strength of FDIs in the first quarter of 2006 was traced to the reversal in the "other capital" account which represented inter-company accounts between local subsidiaries of foreign corporations and their corresponding foreign principals.

Inter-company accounts ended the quarter with a net inflow of $224 million.

On the other hand, the reinvested earnings account likewise grew by 29.4 percent. The BSP said the growth was traced to foreign banks that decided they preferred to retain their earnings in their local branches instead of repatriating them abroad.

The BSP said the net equity capital during the quarter declined by 52 percent to $184 million compared to last year’s $383 million.

Equity placements, originating mainly from the US and Japan, were infused in the following sectors: manufacturing (e.g., chemical and health products, airconditioning systems), construction, real estate, and financial intermediation.

The BSP had projected that for this year, FDIs could go up to as high as $1.6 billion, coming mostly from export-related industries, based on approvals that came in the third quarter of 2005.

The National Statistical and Coordination Board (NSCB) earlier reported that most of the FDIs that were approved in the third quarter of 2005 came from manufacturing, business process out—sourcing, real estate and mining sectors.