Foreign direct investments surge 21% to a record $10b

Net inflow of job-generating foreign direct investments jumped 21.4 percent in 2017 to a record $10.049 billion from $8.280 billion in 2016, as investors continued to consider the Philippines as a favorable investment destination, the Bangko Sentral ng Pilipinas said Monday.

The full-year FDI figure surpassed Bangko Sentral’s earlier projection of $8 billion.  “Investors continue to view the country as a favorable investment destination on the back of sound macroeconomic fundamentals and growth prospects,” the Bangko Sentral said in a statement.

Data showed that major FDI components registered growth last year, with net equity capital investments expanding 25.9 percent to $3.3 billion.  Gross placements of $3.7 billion exceeded withdrawals of $479 million.

Equity capital placements came largely from the Netherlands, Singapore, the United States, Japan and Hong Kong. These were invested in gas, steam and air-conditioning supply; manufacturing; real estate; construction; and wholesale and retail trade activities.

Net availment of debt instruments―consisting mainly of intercompany borrowings/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines―climbed 20.7 percent to $6 billion. Reinvestment of earnings increased 9.3 percent to $776 million.

The Bangko Sentral said the country received an FDI net inflow of $699 million in December 2017 alone, although this was 9 percent lower than $768 million recorded in the same month in 2016.

The Bangko Sentral expects net inflow of FDIs to reach $8.2 billion this year, anchored on the improving global economy.

The Bangko Sentral said the country could sustain the growth in FDI inflows and match the large levels seen in neighboring Asian countries by reforming the rules on foreign ownership, addressing infrastructure gaps and reducing the cost of doing business.

It said among the recent measures taken to promote a more supportive environment for higher foreign investments were the liberalization of foreign bank entry in the country (Republic Act No. 10641 or the Foreign Bank Liberalization Act passed in July 2014) and the phased-in liberalization of the foreign exchange regulatory framework that started In 2007. 

“Prospects for inward flows of FDI into the country continue to be favorable as both ‘push’ [subdued global economic growth] and, more importantly, ‘pull’ [sustained robust macroeconomic performance and investment grade status] factors remain,” the bank said.

American financial and business news website Business Insider put the Philippines on the top of the list of 20 best countries to invest in this year.

Finance Secretary Carlos Dominguez III cited the country’s strong and solid macroeconomic fundamentals and government’s fiscal reforms as major reasons the Philippines landed on the top of the list.

Indonesia came in the second place, followed by Poland, Malaysia, Singapore, Australia, Spain, Thailand, India, Oman, Czech Republic, Finland, Uruguay, Turkey, Ireland, the Netherands, the United Kingdom, Brazil, France and Chile.

The Philippine economy is expected to grow between 7 percent and 8 percent this year, driven by higher fiscal spending, robust domestic demand and investments.

Topics: Bangko Sentral ng Pilipinas , Investment
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