FDIs Continue to Post Net Inflows in July

Manila—(PHStocks)—Bangko Sentral ng Pilipinas (BSP)—Foreign direct investments (FDI) continued to post net inflows for the 13th consecutive month in July 2014 amounting to $436 million. This developed as all FDI components recorded net inflows during the month.

In particular, net equity capital inflows surged to $104 million, or by more than tenfold from $10 million during the same month last year.

Net inflows of equity capital rose significantly in July on the back of the 87.8 percent year-on-year increase in equity capital placements (to $120 million) vis-à-vis the 69.9 percent decline in equity capital withdrawals (to $16 million) relative to the same period in 2013. The bulk of equity capital investments during the month—emanating largely from the United States, Sweden, the Netherlands, Taiwan and Switzerland—was channeled mainly to financial and insurance; real estate; wholesale and retail trade; transportation and storage; and agriculture, forestry, and fishing activities.

In addition, reinvestment of earnings reached $58 million, higher by 11.5 percent from $52 million in July last year. Meanwhile, investments in debt instruments posted net inflows of $274 million, lower by 43.8 percent relative to the level posted during the same month in 2013.

On a cumulative basis, net FDI inflows rose by 56.1 percent year-on-year to reach $4 billion in January-July 2014. This reflected continued favorable investor sentiment on the Philippine economy on the back of the country’s strong macroeconomic fundamentals. By FDI component, net inflows of equity capital increased by 46 percent to $866 million in January-July 2014 from $593 million recorded during the same period last year.

Net equity capital inflows rose significantly during the first seven months of 2014 as the 74.8 decline in withdrawals (to $372 million) outweighed the 40.2 percent decrease in placements (to $1.2 billion). Equity capital investments during the period—which emanated mostly from the United States, Hong Kong, Japan, Singapore, and Taiwan—were channeled mainly to activities related to financial and insurance; real estate; manufacturing; wholesale and retail trade; and transportation and storage activities.

In addition, reinvestment of earnings grew robustly by 61 percent to $458 million during the January-July 2014 period. Finally, investments in debt instruments issued by local affiliates (or intercompany borrowings between foreign direct investors and their subsidiaries/affiliates in the Philippines) in the form of loans and debt securities increased by 58.8 percent year-on-year to $2.7 billion during the first seven months of 2014. This developed as parent companies abroad continued to lend funds to their local subsidiaries/affiliates to sustain existing operations and expand their businesses in the country.

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