NET Foreign direct investments (FDI) posted a record high in September, surging by 123 percent from a year earlier as high equity capital and intercompany borrowings offset a decline in reinvested earnings.
The Bangko Sentral ng Pilipinas (BSP) on Friday reported that FDI had hit a net inflow of $1.52 billion, up from the $680 million recorded in September last year.
“This developed as a result of the notable increase in non-residents’ investments in equity capital and debt instruments issued by their local subsidiaries/affiliates,” the central bank said in a statement.
Recording the biggest rise were net equity capital investments, which increased by 272 percent to $600 million as equity capital placements of $1.15 billion more than offset equity capital withdrawals of $553 million.
The bulk of equity capital investments came from the United Kingdom, the Netherlands, Japan, the United States and Germany, channeled mainly to manufacturing, financial and insurance, construction, wholesale and retail trade, and real estate activities.
Intercompany borrowings or nonresidents’ net placements in debt instruments issued by local affiliates, meanwhile, swelled by 89 percent in September as inflows increased to $869 million from $458 million a year earlier.
Reinvestment of earnings, on the other hand, dropped by 17 percent to $51 million from $61 million a year earlier.
For the January to September period, FDI saw $4.54 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 nine-month period declined by 5.5 percent from $4.8 billion on lower year-to-date tally of intercompany borrowings and reinvested earnings.
Year-to-date FDI inflows could be a reflection of external factors, an equities analyst said.
“I don’t think it says much about the domestic economy as it says more about the developments abroad,” said Justino Calaycay Jr. at Accord Capital Equities Corp.
Calaycay noted improving investment opportunities overseas, especially with the US economy now on the recovery track
By component, the central bank reported that non-residents’ net investments in debt instruments reached $2.52 billion during the nine-month period, lower by 16 percent than the previous year’s $3. 01 billion. Reinvestment of earnings also declined by 11 percent to $575 million.
Investments in equity capital registered net inflows of $1.44 billion during the period from $1.14 billion last year. The bulk came from the United States, Japan, the United Kingdom, the Netherlands and Singapore.
The funds were mainly channeled to manufacturing, financial and insurance, real estate, wholesale and retail trade, and construction activities.