$1.025B in FDI flowed in from Jan. to August

by Jun Vallecera, BusinessMirror

Posted at Oct 11 2012 09:00 AM | Updated as of Oct 11 2012 05:00 PM

MANILA, Philippines - Foreign direct investment (FDI), the kind that stays for the long haul in the country and generates not just employment but taxes for the national coffers as well, almost doubled in the first seven months to $1.025 billion.

In July alone, net FDI inflows totaled $108 million, which was a turnaround from a year ago when the Bangko Sentral ng Pilipinas (BSP) reported a net outflow totaling $261 million.

The FDI’s doubling, according to the BSP, happened against a backdrop of what it described as a challenging external environment.

“Cumulative [FDI] flows reached $1 billion in the first seven months of 2012, nearly twice the $568-million level recorded in the same period in 2011. Gross equity capital placements for January to July 2012 reached $1.3 billion, close to a fourfold increase from the $356 million posted in the previous year,” it said.

The BSP credited “[t]he appreciable increase in equity capital” for the period in review to “the acquisition of shares by a foreign firm in a local beverage manufacturing company.”

Reinvested earnings, representing profits not repatriated as dividends to parent companies overseas, amounted to $85 million.

This amount, however, was lower by 55 percent than the $189-million level in the comparable period in 2011.

The other capital account registered a net outflow of $161 million, a turnaround from the $381-million net inflows recorded in the same period last year.

This showed increased profitability of foreign subsidiary firms in the Philippines that subsequently paid back what they owe their foreign parents and thus the net outflow.

All FDI components posted positive balances during the month, reflecting foreign investors’ growing optimism about the country’s macroeconomic fundamentals, the BSP said.

In particular, net equity capital infusion amounting to $31 million—sourced mostly from the United States, Thailand and Japan—was mainly channeled to the information-and-communication, real-estate, manufacturing, mining and financial-intermediation sectors.

Net inflows in the other capital account—consisting mainly of inter-company borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines—reached $66 million.

Equity capital posted reversal from the net outflows recorded in the same period a year ago amounting to $262 million and other capitals, reversal amounting to $16 million.

The reinvested earnings account recorded a net inflow amounting to $11 million.

This net inflow, however, was lower by 35.3 percent compared to its year-ago level of $17 million.