FDI inflows reach $2.02 billion in Oct, highest in 16 months

MANILA, Philippines — The inflow of foreign direct investments (FDIs) tripled in October last year, hitting the highest level in 16 months due to continued investor confidence in the country’s strong macroeconomic fundamentals and growth prospects, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Net FDI inflows reached $2.02 billion in October, $1.35 billion higher than the $670 million recorded in the same month in 2016.

This was the biggest monthly FDI inflow since the record $2.24 billion booked in April 2016 when the Bank of Tokyo - Mitsubishi UFJ pumped in P37 billion in fresh equity for a 20 percent stake in Security Bank Corp.

Data showed equity placements soared by a dramatic 1,788 percent to $1.59 billion in October last year from a year-ago level of $84 million, helping the Philippine Stock Exchange index (PSEi) reach a fresh record high.

The equity from the Netherlands, Singapore, Kuwait, the US, and Germany were channeled to electricity, gas, steam and air-conditioning supply activities, manufacturing, construction, real estate and wholesale and retail trade.

On the other hand, withdrawals surged 170.4 percent to $66 million from $24 million.

The BSP said non-residents’ investments in debt instruments or lending by parent firms abroad to their local affiliates declined 22 percent to $431 million in October last year from $553 million in the same month in 2016, while reinvestment of earnings remained steady at $57 million.

Finance Secretary Carlos Dominguez earlier said the $1.3-billion deal between Energy Development Corp. and the consortium of Macquarie Infrastructure and Real Assets and Arran Investment Pte. Ltd. as well as the $1-billion acquisition of Bulacan-based Mighty Corp. by Japan Tobacco would boost FDIs this year.

For the first 10 months of last year, the BSP said net FDI inflow grew 20.5 percent to $7.86 billion from $6.52 billion in the same period in 2016.

Equity placements jumped 54.7 percent to $3.06 billion from January to October last year compared to $1.95 billion in the same period last year. Capital investments came mostly from the Netherlands, US, Singapore, Japan, and Hong Kong.

The BSP said withdrawals surged 70.7 percent to $465 million from $272 million.

Despite the plunge in equity other than reinvestment of earnings, the BSP said investments in debt instruments climbed 8.5 percent to $4.6 billion from $4.24 billion while reinvestments of earnings rose 9.4 percent to $662 million from $605 million.

The BSP retained its net FDI inflow target to $8 billion for 2017 after it reached a record high of $7.9 billion in 2016.

ING Bank Manila senior economist Joey Cuyegkeng said acquisition-related foreign investments generated an additional $1.5 to $2 billion in the fourth quarter of last year.

This, he explained, helped the peso recover against the dollar starting in October. The peso plunged to a fresh 11-year low of 51.77 to $1 in Oct. 25 before ending strongly at the 49 to $1 level.