FDI inflows list 6-month high in February

MANILA, Philippines — Net inflows of foreign direct investments (FDI) recovered strongly, surging 20.2 percent to hit a six-month high of $746 million in February from $621 million in the same month last year as investors remain confident in the Philippine economy on the back of strong economic growth prospects and sound macroeconomic fundamentals, according to the Bangko Sentral ng Pilipinas (BSP).

The latest FDI inflow was the highest since August last year with $756 million.

According BSP, net equity capital investments jumped by 141.7 percent to $233 million in February from $96 million a year ago due to the 126.3 percent increase in equity capital placements from Japan, China, US, Singapore and Switzerland.

The inflows were channelled to transportation and storage, financial and insurance, manufacturing, real estate as well as professional, scientific and technical industries.

Withdrawals last February went up by 42.1 percent to $25 million from $18 million a year ago.

Likewise, the BSP said reinvestment of earnings grew by 13.7 percent to $79 million from $69 million, while placements in debt instruments issued by local affiliates or intercompany borrowings recorded lower net inflows of $435 million from $455 million.

For the first two months, net FDI inflows declined by 15.7 percent to $1.4 billion from $1.6 billion in the same period last year due mainly to the 67.1 percent plunge in non-residents’ net equity capital investments as placements decreased by nearly 32 percent.

Equity capital placements in January and February came mostly from Japan, China, South Korea, Mauritius, and the US.

The BSP said net placements in debt instruments increased by nearly 13 percent to $1 billion from $896 million, while reinvestment of earnings grew by 10 percent to $155 million.

BSP Governor Benjamin Diokno, however, remained optimistic, saying the rising FDI inflows over the past few years reflect strong interest from foreign investors.

 “Probably around $10 billion or maybe higher, there’s a lot of interest in this country. The Philippines is probably going to be one of the fastest growing countries in this part of the world,” Diokno said.

Diokno said FDI inflows have increased to around $10 billion from only $2 billion over the past few years.

 “The rise of FDIs in recent years shows that investors have a lot of confidence in the Philippines,” Diokno said.

The BSP expects to attract more than $10.2 billion in net FDI inflows this year.

Diokno said more investors are expected to take a look at the Philippines as the country nears the much coveted A rating from international debt watchers.

The Philippines received a rating upgrade from S&P Global Ratings to BBB+ or two notches above minimum investment grade from BBB on a stable outlook.

Likewise, Japan Credit Rating Agency upgraded the country’s outlook to positive from negative with a rating of BBB+.

The rating is just a notch lower from the A scale. Moody’s Investors Service and Fitch Ratings has assigned a notch above minimum investment grade for the Philippines.