FDI surges 30.5% to $1.3 billion in 8 months

MANILA, Philippines - Foreign direct investments (FDI) surged by 30.5 percent to $1.27 billion in the first eight months this year from $977 million a year ago on the back of sustained equity capital inflows and higher reinvested earnings, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

“The level was higher by 30.5 percent than that registered a year ago owing to sustained equity capital inflows and higher reinvested earnings despite challenging global economic conditions,” BSP Governor Amando M. Tetangco Jr. said.

Tetangco pointed out that equity capital inflows jumped by 33.2 percent to $1.33 billion during the eight-month period from $1 billion in the same period last year.

Data showed that equity placements went up by 24.8 percent to $1.44 billion from $1.15 billion last year while equity withdrawals plunged by 30.1 percent to $107 million from $153 million.

The BSP chief said equity investments came from the US, Japan, Hong Kong, and the Netherlands. The bulk of the equity capital was placed in manufacturing, real estate, construction, services, financial intermediation, mining, and telecommunications.

On the other hand, reinvested earnings for the first eight months of the year amounted to $104 million, a complete reversal of the $76-million net outflow registered in the same period last year.

Data also showed that other capital account including intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines reversed to a net outflow of $162 million from a net inflow of $52 million in the same period last year. 

The BSP attributed the higher outflows to the intercompany loan repayments to foreign direct investors and higher trade credits extended to parent companies abroad.

For the month of August alone, the BSP chief said FDI inflows fell 29.4 percent to $36 million from $51 million in the same month last year.

Equity capital infusions increased by 15.8 percent to $22 million in August from $19 million in the same month last year while reinvested earnings almost doubled to $30 million from $16 million.

 “In August 2009, gross equity capital placements reached $53 million consisting largely of capital infused by a Japanese firm in a local corporation. Reinvested earnings increased by 87.5 percent to $30 million as investors opted to retain earnings or profits in local enterprises,” Tetangco said.

The BSP has decided to double the projected FDI inflows this year to $1.5 billion instead of $740 million this year due to strong equity inflows and higher reinvested earnings.