The Bangko Sentral ng Pilipinas revised upward the net inflow target for foreign direct investments this year to $9.2 billion from the previous estimate of $8.2 billion due to the brighter outlook for both the domestic and global economies and the impact of the massive infrastructure projects of the government.
“Net inflows of FDI in 2018 are projected to reach $9.2 billion, driven primarily by the sustained positive developments in the domestic economy, expected improvement in global economic conditions relative to 2017 as well as the implementation of public-private partnership projects that were approved/awarded in the previous years, when most projects started,” the central bank said over the weekend.
“FDI uptick is further seen in 2018 in line with the continued fast-tracking and modernization of the country’s soft and hard infrastructure, growing interest from nontraditional investment sources, and improved global perception of the Philippines as an investment destination,” the regulator said.
FDI net inflows totaled $2.2 billion in the first quarter of 2018, an increase of 44 percent from $1.5 billion in the comparable period last year.
Net equity capital for the quarter increased more than six-fold to $887 million from a year ago as gross placements of $996 million more than compensated for the withdrawals of $109 million.
Equity capital placements originated mainly from Singapore, Hong Kong, China, Japan, and Taiwan. The bulk of the placements were invested in manufacturing; financial and insurance; real estate; arts, entertainment and recreation; and electricity, gas, steam and air-conditioning supply activities.
Net investments in debt instruments reached $1.1 billion, down 8.2 percent from $1.2 billion in the previous year. Reinvestment of earnings was steady at $193 million.
Net inflow of foreign direct investments in March jumped 27 percent to $682 million from $537 million a year ago, as net equity capital increased markedly on the back of higher gross placements of equity capital ($351 million from $51 million) and lower withdrawals ($33 million from US$42 million).
Equity capital infusions came mostly from Singapore, Hong Kong, Japan, the United States and Sweden. These were channeled largely to manufacturing, real estate, art, entertainment and recreation, and financial and insurance activities.
Non-residents’ investments in debt instruments issued by local affiliates (or inter-company borrowings) posted net inflows of $301 million, down 36 percent year-on-year.
Meanwhile, reinvestment of earnings increased 13 percent to $63 million in March 2018 from $56 million in March 2017.
Earlier, Bangko Sentral Governor Nestor Espenilla Jr. said he was expecting the growth momentum of foreign direct investments to be sustained this year, citing a number of drivers for expansion such as the country’s solid macroeconomic fundamentals and strong partnerships with traditional and non-traditional trading partners.