FDI reach record $10.05 billion in 2017 – BSP

MANILA, Philippines — Net inflow of foreign direct investments (FDIs) reached a record high of $10.05 billion in 2017 on the back of positive investor sentiment amid the country’s sound macroeconomic prospects, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

According to data from the BSP, net inflow of FDIs last year amounted to $10.05 billion, 21.4 percent higher than the $8.28 billion recorded in 2016.

It also breached the full-year 2017 target of $8 billion earlier set by the BSP.

“Investors continue to view the country as a favorable investment destination on the back of the country’s sound macroeconomic fundamentals and growth prospects,” the BSP said.

The economy expanded 6.6 percent in the fourth quarter of 2017, leading to a full-year growth of 6.7 percent in 2017.  Economic managers expect economic growth this year to hover between seven and eight percent.

Last year, the BSP said all major FDI components registered increases during the period.

In particular, net equity capital investments rose 25.9 percent to $3.26 billion from $2.59 billion in 2016. This happened as gross placements, amounting to $3.74 billion, outpaced withdrawals which only reached $479 million.

The central bank said equity capital placements originated mainly from the Netherlands, Singapore, the United States, Japan, and Hong Kong.

By sector, equity placements were channeled to gas, steam, and air conditioning supply; manufacturing; real estate; construction; and wholesale and retail trade activities.

Meanwhile, the BSP said net availment of debt instruments – comprised mainly of intercompany borrowings or lending between foreign investors and their subsidiaries – reached $6.01 billion, 20.7 percent higher as compared to the $4.98 billion posted in 2016.

Reinvestment of earnings likewise expanded 9.3 percent year-on-year to $776 million from $710 million.

On the other hand, the BSP said net inflow of FDIs for the month of December 2017 alone, declined nine percent to $699 million from $768 million the same month the previous year.

The central bank attributed this to the drop in the net investments in debt instruments, which was cut more than half to $335 million during the period.

Net placements of equity capital, likewise, inched down 0.4 percent to $305 million, originating from Singapore, Japan, the Netherlands, the US and Luxembourg.

These were placed in manufacturing; real estate; wholesale and retail trade; information and communication; and arts, entertainment and recreation activities.

Reinvestment of earnings, meanwhile, grew 24.1 percent to $59 million during the month.

Inflows from FDIs, remittances, exports, tourism receipts and the business process outsourcing sector help build the country’s gross international reserves that serve as buffer against external shocks.

For 2018, the BSP said it sees FDIs reaching $8.2 billion, higher than the $8 billion target for 2017.