Foreign direct investment (FDI) in the Philippines gained pace in November from a year earlier after two consecutive months of declines, boosting the year-to-date tally.
Net FDI surged by 59.4 percent to $756 million in November from $474 billion a year earlier, data released by Bangko Sentral ng Pilipinas (BSP) showed.
From $342 million in October this year, net FDI rose by 121 percent in November.
“The bulk of the net inflows during the month was in the form of debt instruments (or intercompany borrowings), which amounted to $544 million, about three times the $185 million recorded in November 2015,” the BSP said in a statement.
This more than compensated for the 34.7-percent decline in net equity capital investments to $154 million from $236 million, it added.
In gross terms, equity capital placements rose by 77.9-percent to $437 million while withdrawals increased by more than 28 times to $283 million.
Placements from Hong Kong, the United States, Taiwan, Germany, and the Czech Republic were mainly channeled into arts, entertainment and recreation, as well as financial and insurance, real estate, wholesale and retail trade, and professional, scientific and technical activities.
Reinvested earnings grew by 9.5 percent to $58 million.
The Philippines has achieved significantly higher FDI inflows in 2016, and the key challenge for the Duterte administration in 2017 will be to further build on this and boost FDI inflows, Rajiv Biswas, Asia-Pacific chief economist at IHS Markit, told The Manila Times.
Biswas, however, noted the Philippines ranks 99th in the World Bank’s Ease of Doing Business Report for 2017, with no improvement in ranking compared with 2016.
This is still significantly below the ranking of other Asean [Association of Southeast Asian Nations] peers, such as Singapore which is ranked 2nd, Malaysia at 23rd and Thailand at 46th,” he said.
Boosting long-term FDI inflows requires significant improvements in key infrastructure such as power, airports and ports, as well as the regulatory environment for foreign investment, he said.
From January to November 2016, net FDI inflows registered a year-on-year increase of 25.4 percent to $6.97 billion.
“The continued FDI inflows were buoyed by investors’ confidence in the economy on the back of sound macroeconomic fundamentals and sustained growth potential,” the BSP said.
Net availments of debt instruments increased by 44.4 percent to $4.5 billion from $3.1 billion. In addition, net equity capital investments grew by 3.4 percent to $1.8 billion.
Gross equity capital placements of $2.4 billion exceeded withdrawals of $555 million, the bulk of which emanated largely from Japan, Hong Kong, Singapore, the United States and Taiwan and mainly channeled to financial and insurance, arts, entertainment and recreation, manufacturing, real estate and construction activities. Reinvested earnings totaled $663 million during the period.