Despite doubling yr-ago level — BSP
Net inflows of foreign direct investment (FDI) in the Philippines hit their lowest level this year so far in August, although year-on-year comparisons showed continued growth of as much as 112.3 percent, central bank data showed on Monday.
Net inflows in August stood at $299 million, down more than 30 percent from P436 million in July, as shown by figures from the Bangko Sentral ng Pilipinas (BSP).
Year-on-year, net FDI inflows for the month in review more than doubled the $141 million posted in August last year.
In the eight months to August, net FDI inflows reached $4.306 billion, up 59 percent from $2.709 billion in same period the previous year, “buoyed by investors’ confidence in the economy on the back of the country’s sound macroeconomic fundamentals,” the BSP said in a statement released along with the data.
In contrast to hot money, FDIs are direct capital investments, which are invested through the local financial markets. The BSP said the FDI figures cover actual investment inflows that could be in the form of borrowings between affiliates, equity capital, and reinvestment of earnings.
Equity capital inflows
The BSP said the bulk of the increase in FDI was due to the 329.9 percent year-on-year surge in equity capital placements to a net inflow of $180 million from $42 million a year earlier.
For the first eight months of the year, these placements posted a net inflow of $1.046 billion, or 64.7 percent higher than the year-ago level of $635 million. Placements of $1.426 billion offset withdrawals worth $380 million.
The central bank said the bulk of the equity capital investment originated mainly from the United States, Hong Kong, Japan, Singapore, and Thailand, and were channeled to activities related to financial and insurance; real estate; manufacturing; transportation and storage; and wholesale and retail trade sectors.
At the same time, intercompany borrowings, or non-residents’ net placements in debt instruments issued by local affiliates in August rose to $59 million from $45 million in the same period last year. Similarly, intercompany borrowings for the first eight months expanded by 58.1 percent to $2.743 billion from $1.735 billion a year ago.
Reinvested earnings increased to $59 million in August 2014 from $54 million a year earlier. On a cumulative basis, reinvestment of earnings rose 52.8 percent to $517 million from $338 million last year.
The central bank expects net FDI inflows to reach $1 billion this year, lower that the $3.9 billion recorded for full-year 2013.