9-month tally surpasses BSP full-year forecast
Net inflows of foreign direct investment (FDI) to the Philippines recovered in September after hitting their lowest level this year in August, while the cumulative total through nine months surpassed the central bank’s projection for the full-year 2014.
September net FDI inflows stood at $680 million, up 127 percent from $299 million in August, based on figures released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday.
Year-on-year, net FDI inflows for the month in review more than doubled the $314 million posted in September last year.
“The sustained increase in net inflows during the month reflects continued investor confidence in the country’s solid macroeconomic fundamentals,” the BSP stated.
In the nine months to September, net FDI inflows reached $4.876 billion, up 61.3 percent from $3.023 billion in same period the previous year.
The cumulative net FDI inflows surpassed the $4.4 billion projection of the central bank this year.
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 $161 million net inflow in equity capital placements compared to the $7 million net inflow a year earlier.
For the first nine months of the year, these placements posted a net inflow of $1.139 billion, or 77.3 percent higher than the year-ago level of $643 million. Placements of $1.613 billion offset withdrawals worth $475 million.
The central bank said the bulk of the equity capital investment originated mainly from the United States, Hong Kong, Japan, Singapore, and Taiwan, and were channeled to activities related to financial and insurance; manufacturing; real estate; wholesale and retail trade; and transportation and storage sectors.
Meanwhile, intercompany borrowings, or non-residents’ net placements in debt instruments issued by local affiliates in September rose to $458 million from $263 million in the same period last year. Intercompany borrowings for the first nine months expanded by 54.5 percent to $3.087 billion from $1.999 billion a year ago.
Reinvested earnings increased to $61 million in September 2014 from $43 million a year earlier. On a cumulative basis, reinvestment of earnings rose 70.3 percent to $650 million from $382 million last year.