Net FDI breaches $1-billion mark as of July

MANILA, Philippines - Foreign direct investments (FDI) breached the $1-billion mark in the first seven months of the year – nearing official forecast – on the back of the country’s good macroeconomic environment, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

FDI recorded a net inflow of $108 million in July, a reversal of the $266-million net outflow posted in the same period last year. This brought the year-to-date tally to $1.025 billion, up 80.4 percent from $568 million.

A net inflow means more investments entered the country than left.

The seven-month figure is just about $2 million short of BSP’s revised $1.2-billion forecast for the year. A new outlook is set to be released by next month.

“All FDI components posted positive balances during the month, reflecting foreign investors’ growing optimism over the country’s macroeconomic fundamentals,” a BSP statement said.

The bulk of FDI came in the form of net equity capital, which are usually investments of foreign firms in their local offices here. This segment recorded a net inflow of $31 million in July, bringing year-to-date total to $1.101 billion from previous year’s net outflow of $2 million.

“The appreciable increase in equity capital for the period in review was due to the acquisition of shares by a foreign firm in a local beverage company,” BSP said, without elaborating.

It did say, however, that the bulk of equity investments came from the United States, Thailand and Japan and were channeled to the information and communication, real estate, manufacturing, mining and financial intermediation sectors.

Meanwhile, reinvested earnings decreased by $6 million to $11 million in July, bringing the total tally so far to $85 million. The figure, represented a 55-percent drop from $189 million last year.

Other capital accounts- consisting largely of borrowing and lending between foreign companies and their offices here- recorded its first net inflow for the year in July, data showed. This segment booked $66 million in inflows that month.

From January to July, this however remained to be the major source of outflows, with net investments totaling $161 million leaving the country during that period. This contrasted to a net inflow of $381 million in 2011.

FDI is part of the country’s balance of payments (BOP), which measures the country’s capacity to service its debts and meet its external obligations.

In June, BSP revised its forecasts for FDI and BOP downwards to take into account the possible effects of the euro zone crisis to investor sentiment.

BSP Governor Amando Tetangco Jr. has said newly revised BOP outlooks will be released between October and November as part of the central bank’s biannual review.