FDIs surge 62% to $5.72 B

MANILA, Philippines - Foreign direct investments surged 62 percent in the first 11 months of 2014, reflecting strong investor confidence in the economy, the Bangko Sentral ng Pilipinas reported yesterday.

The Philippines registered a net inflow of $5.72 billion in FDIs from January to November last year, higher than the $3.539 billion recorded in the same period in 2013.

“This reflected investors’ confidence in the Philippine economy on the back of sound macroeconomic fundamentals and strong growth prospects,” the central bank said.

The economy grew by 6.1 percent last year, slower than the 7.2-percent growth in 2013. This was short of the government’s 6.5- to 7.5-percent target but still the second fastest in Asia during the period.

For this year and the next, the government hopes to grow the economy by seven to eight percent.

During the 11-month period, placements in debt instruments or loans made by local units from their parent firms accounted for the bulk of the FDIs at $3.403 billion as of November, a 46-percent increase from $2.33 billion in the same period in 2013.

The central bank said this was supported the local units’ existing operations and expansion of businesses in the country.

Equity capital or fresh investments made by foreign companies in their Philippine subsidiaries and affiliates also ballooned 115 percent to $1.554 billion from $723 million, the BSP said.

These funds came mainly from the United States, Hong Kong, Singapore, Japan, and Australia, and went into the financial and insurance sector, manufacturing, real estate, wholesale and retail trade, and transportation and storage activities.

At the same time, reinvested earnings climbed 57 percent to $763 million as of November from $486 million in the same period a year prior, the BSP said.

For November alone, FDIs amounted to $399 million, 34 percent more than the $297 million recorded in the same month in 2013.

Equity capital swelled to $201 million from $7 million, while reinvested earnings slid 10 percent to $50 million from $55 million. Placements in debt instruments, meanwhile, fell 37 percent to $148 million from $235 million.

The central bank said that during the month, most of the equity capital investments were placed in the financial and insurance sector, manufacturing, real estate, transportation and storage, and wholesale and retail trade activities.

In 2013, FDIs increased 20 percent to $3.86 billion, breaching the BSP’s $2.1-billion forecast. The BSP in November last year hiked its estimate for 2014 FDIs to $4.4 billion from a July projection of just $1 billion.