Foreign direct investments (FDI) in the Philippines continued to post net inflows in July but at a slower pace than the year-earlier and preceding month’s levels.
Data from the Bangko Sentral ng Pilipinas (BSP) on Friday showed net FDI inflows amounted to $436 million in July.
Compared with the year-earlier figure of $549 million, net FDI inflows for July eased by 20 percent or $113 million. The July net inflow this year was also lower than the net $588 million posted in the preceding month.
In the seven months ending July, net FDI stood at a $4.008 billion inflow, up from $2.568 billion in same period the previous year, which the central bank said “reflects favorable investor sentiment toward the Philippine economy on the back of the country’s strong macroeconomic fundamentals.”
The BSP explained that statistics on FDI covers actual investment inflows, which could be in the form of equity capital, reinvestment of earnings, and borrowings between affiliates.
“In contrast to investment data from other government sources, the BSP’s FDI include investments where ownership by the foreign enterprise is at least 10 percent,” it said.
The central bank noted that the increase in July FDI developed as all components recorded net inflows during the month.
Equity capital inflows
Net inflows of equity capital placements rose significantly in July to $162 million from net inflows of $63 million a year earlier.
For the first seven months, these placements also posted net inflows of $866 million, or 46 percent higher than the year-ago level of $593 million, as placements of $1.24 billion offset the $372 million withdrawals.
The central bank said the bulk of the equity capital investments during the period originated mainly from the United States, Hong Kong, Singapore, and Taiwan, and were channeled to activities related to financial and insurance; real estate; manufacturing; wholesale and retail trade; and transportation and storage activities.
Borrowings between affiliates in July posted net inflows of $274 million but lower by 43.8 percent relative to the level posted during the same month in 2013.
Conversely, intercompany borrowings for the first seven months of the year were up by 58.8 percent to $2.68 billion from $1.69 billion a year ago.
“This developed as parent companies abroad continued to lend fund to their local subsidiaries/ affiliates to sustain existing operations and expand their businesses in the country,” the BSP explained.
In addition, reinvestment of earnings in July reached $58 million, 11.5 percent higher from $52 million in the same period last year. On a cumulative basis, reinvested earnings rose by 61 percent to $458 million from $284 million last year.
For this year, the central bank expects net FDI inflows to reach $1 billion, lower than the $3.9 billion recorded in 2013.