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FDI surges in Q1

by June 10, 2016 General

June 10, 2016 9:49 pm

Jan-Mar investments 52.1% higher at $1.29-B

STRONG March inflows boosted foreign direct investments (FDI) in the first quarter of the year, with the net total in the January-March period hitting $1.293 billion, up 52.1 percent from $850 million recorded in the same period a year earlier, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.

FDI in March registered a net inflow of $364 million, a 59.1-percent rise from the $229 million recorded in March 2015, with net inflows to intercompany borrowings and equity capital investments more than offsetting a decline in reinvested earnings, the central bank said.

“The country’s sustained favorable economic performance as evidenced by 69 consecutive quarters of positive growth, and growth prospects for the year ahead, helped drive inflows in all FDI components during the period,” the BSP said in a statement.

The BSP said intercompany borrowings or non­residents’ net placements in debt instruments issued by local affiliates, largely accounted for the increase in FDI in March.

Net investments in debt instruments more than doubled to $262 million in March, up 114.2 percent from $122 million a year earlier.

Non-residents’ net investments in debt instruments for the first quarter reached $617 million, 50.1 percent higher than the previous year’s $411 million.

Bank of the Philippine Islands associate economist Nicholas Antonio Mapa said the appetite for debt instruments was the big reason for the rise in overall FDI, as existing corporations and companies look to expand their business holdings in the Philippines given the relatively rosy outlook for economic growth, despite the impending change in leadership.

“These companies were willing to bet on the domestic prospects of the Philippines, given its underlying strength and promise,” he said.

Net equity capital investments expanded by 6.9 percent in March to $53 million from $50 million a year earlier. Equity capital placements of $135 million more than offset withdrawals of $82 million.

On a quarterly basis, investments in equity capital registered net inflows of $495 million during the period from $254 million last year.

The bulk of equity capital investments came from Singapore, the United States, Hong Kong, Japan and Taiwan, and were channeled mainly to accommodation and food service; real estate; manufacturing; financial and insurance; and wholesale and retail trade activities.

Reinvestments of earnings, however, declined 14.3 percent to $49 million from $57 million a year earlier in March.

Reinvestments of earnings for the first three months of the year decreased by 2.1 percent to $181 million.

The BSP has a $6.3-billion target for this year. Last year saw net FDI hitting $5.72 billion, falling short of the $6-billion forecast.