BY MARICEL E. BURGONIO SENIOR REPORTER

Foreign direct investment (FDI) to the Philippines surged a year after the Lehman Brothers collapse sent investors packing for safe havens. In a statement, the Bangko Sentral ng Pilipinas (BSP) said it registered net FDI inflows of $59 million in October, or 195.2 percent higher than the net outflows of $62 million in the same month of 2008.

The October figure led net FDI inflows to hit $1.3 billion in the first 10 months of 2009, or 17.9 percent higher than the $1.126 billion in the same period of 2008.

This is $200 million short of the BSP forecast of $1.5 billion for 2009. For 2010, the central bank expects inflows of $1.8 billion.

Foreign direct investment pertains to money invested by foreigners in the Philippines for establishing new businesses or expanding existing ones, and as such generate employment. To recall, FDI to the Philippines collapsed in October 2008 after a string of failed big-name US financial companies.

“All FDI components posted net inflows during [October] reflecting favorable investor sentiment on the country’s underlying macroeconomic fundamentals,” BSP Governor Amando Tetangco Jr. said.

The total capital infusion reached $41 million, or 28.3 percent higher than the $16 million in October 2008, with the main investors coming from Hong Kong, the US and Japan.

Reinvested earnings and other capital investments also posted net inflows of $11 million and $7 million, respectively, during the month.

Investors from the US, Japan, Hong Kong, and The Netherlands brought in money for the manufacturing, real estate, construction, services, financial intermediation, mining, trade/commerce, and transport/storage/communication sectors.

Reinvested earnings posted net inflows of $125 million, a reversal from the $131-million net outflows in the same 10-month period of 2008, as investors were encouraged to retain part of their earnings in local enterprises amid the domestic economy’s resilience.

However, the other capital account, which consists of inter-company borrowing/lending between foreign direct investors and their subsidiaries in the country, posted an outflow of $157 million, a reversal of the net inflow of $197 million in October 2008. This was attributed to higher trade credits extended by local subsidiaries to parent companies abroad.