Oct net FDI inflows up 1.4% at $451M

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NET foreign direct investments (FDI) continued to expand in October 2015 but at a slower pace and the year-to-date tally still behind the central bank target.

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The Bangko Sentral ng Pilipinas (BSP) on Monday reported that FDI hit a net inflow of $451 million, 1.4 percent up from the $445 million recorded in October last year.

The growth rate, however, was substantially lower than the 123 percent surge in September as inflows in two of the major FDI components posted annual declines.

Recording the biggest fall were net equity capital investments, which dropped by 52.5 percent to $101 million from $213 million a year earlier. The number stayed positive as equity capital placements of $109 million more than offset equity capital withdrawals of $8 million.

The bulk of equity capital investments came from South Korea, Japan, the United States, Thailand and Taiwan, channeled mainly to financial and insurance; real estate; manufacturing; administrative and support services; and electricity, gas, steam and airconditioning supply activities.

Reinvestment of earnings, meanwhile, dropped by 1.9 percent to $62 million from $63 million a year earlier.

Offsetting the decline were intercompany borrowings or non­residents’ net placements in debt instruments issued by local affiliates, which swelled by 71.1 percent in October as inflows increased to $287 million from $168 million a year earlier.

For the January to October 2015 period, FDI hit $4.99 billion in net inflows – still behind the central bank’s $6-billion target for this year. Last year saw net FDI hit a record $6.2 billion, topping a $4.4-billion forecast.

Net FDI during the 10-month period declined by 4.9 percent from $5.25 billion on the lower year-to-date tally of intercompany borrowings and reinvested earnings.

By component, non-residents’ net investments in debt instruments reached $2.81 billion during the 10-month period, lower by 11.6 percent than the previous year’s $3.18 billion. Reinvestments of earnings also declined by 10.8 percent to $637 million.

Investments in equity capital registered net inflows of $1.54 billion during the period from $1.35 billion last year. The bulk came from the United States, Japan, the United Kingdom, the Netherlands and Singapore.

The funds were mainly channelled to manufacturing, financial and insurance, real estate, wholesale and retail trade, and construction activities, the central bank reported.

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