FDI seen topping $10 B in 2018, 2019

MANILA, Philippines — The inflow of foreign direct investments (FDI) is expected to top $10 billion anew in 2018 and 2019 as investors continue to view the Philippines as a favorable investment destination, according to the Bangko Sentral ng Pilipinas (BSP).

The central bank now expects the inflow of hard investments into the country reaching a record high of $10.4 billion instead of $9.4 billion this year. The BSP originally expected FDI inflows to reach only $8.2 billion this year.

For 2019, the BSP sees FDI inflows easing slightly to $10.2 billion.

BSP assistant governor Francisco Dakila said FDI inflows jumped 24.2 percent to $8.04 billion from January to September this year compared to $6.47 billion in the same period last year.

“It’s very strong,” Dakila said.

Investment inflows continued, buoyed by investor confidence in the Philippine economy on the back of strong macroeconomic fundamentals and high growth prospects.

As a result, foreign investors infused $2.28 billion in fresh capital into the country in the first nine months, 41 percent higher than the $1.62 billion injected in the same period last year

The fresh capital coming from Singapore, Hong Kong, US, Japan, and China were infused in manufacturing, financial and insurance, real estate, arts, entertainment and recreation as well as  electricity, gas, steam and air-conditioning supply activities

On the other, equity withdrawals inched up 2.4 percent to $382 million from $373 million. Reinvestment of earnings amounted to climbed 1.7 percent to $614 million from $604 million, while investments in debt instruments rose 19.6 percent to $5.52 billion from $4.62 billion.

FDIs inflows rose 21.4 percent to an all-time high of $10.05 billion in 2017 from $8.28 billion in 2016.

Inflation eased to a four-month low of six percent in November from a near-decade high of 6.7 percent in October. The consumer price index (CPI), however, still remained elevated, averaging 5.2 percent in the first 11 months and exceeding the central bank’s two to four percent target.

This prompted the BSP to jack up interest rates by 175 basis points in five consecutive rate-setting meetings since May to keep inflation expectations well anchored.

Last Dec. 13, the central bank paused from its tightening episode and kept benchmark rates unchanged as it expects the faster return of inflation back to the two to four percent target range in the first quarter of next year instead of the second quarter.