Net foreign investment drops 14.3% on-yr in Oct

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Up in first 10 mths

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Foreign direct investment (FDI) in the Philippines declined in October from a year earlier and from September as placements in debt instruments and reinvested earnings fell.

The year-to-date tally, however, showed an increase from the first 10 months of 2015.

The net FDI dropped 14.3 percent to $342 million in October from $399 billion a year earlier, data released by Bangko Sentral ng Pilipinas (BSP) on Tuesday showed. From $469 million in September this year, the net FDI in October fell by 27 percent.

“Net availments of debt instruments amounted to $225 million, lower by 20.3 percent compared with the $282 million recorded in October 2015,” the BSP said in a statement.

Reinvested earnings dropped to $57 million, down 8.5 percent from $62 million in October 2015.
Equity capital posted net inflows of $60 million, up 10.2 percent higher from $55 million.

Placements came mainly from Germany, Taiwan, the United States, the Netherlands and Cayman Islands, and mainly channeled into financial and insurance, manufacturing, real estate, construction, and accommodation and food service activities.

The October FDI reflects the usual monthly volatility in data, which can be lumpy depending on the size of individual projects in a particular month, Rajiv Biswas, Asia-Pacific chief economist at IHS Markit, told The Manila Times.

10-month tally

Biswas noted a positive aspect of the FDI numbers is the first 10-months figures. “This indicates a significant improvement in FDI inflows in 2016 to date,” he said.

Nearly two-thirds of FDI net inflows was in the form of intercompany borrowings which increased by 34.9 percent to $3.93 billion from $2.9 billion.

Net equity capital placements expanded by 9.3 percent to $1.67 billion, with gross placements of $1.94 billion, which more than offset the withdrawals of $272 million.

The gross equity capital placements came mostly from Japan, Singapore, the United States, Hong Kong, and Taiwan.

Reinvested earnings totaled $605 million during the 10-month period.

Despite the buoyant performance of the Philippines economy in recent years, total FDI inflows remain weak compared to other Southeast Asian nations such as Indonesia, which recorded FDI inflows of $29 billion in 2015 and $21 billion in the first three quarters of 2016, while Vietnam achieved an estimated FDI of $16 billion in 2016, Biswas noted.

“A key priority for the Philippines over the medium-term will be to boost FDI inflows significantly by attracting foreign multinationals to build new manufacturing facilities and invest in infrastructure projects in the Philippines,” he said.

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