Net inflow of foreign direct investments in September posted a record-high $1.5 billion, more than double the year-ago level of $680 million on increasing confidence on the country’s macro-economic fundamentals.
The September net inflow was also significantly higher than the $526-million net inflow in August this year. Net inflow in the first nine months, however, declined 5.5 percent to $4.5 billion from $4.8 billion a year ago.
“The surge in FDI inflows in September 2015 reflects investor confidence in the country’s strong macroeconomic fundamentals, sustained GDP growth of 5.8 percent in Q2 2015, manageable inflation, consistent build-up of foreign exchange reserves, and stable exchange rate,” Bangko Sentral ng Pilipinas said in a statement Friday.
Equity capital investments during the month increased more than three-fold to $600 million, as gross placements of $1.2 billion more than offset withdrawals of $553 million.
The bulk of equity capital placements came from the United Kingdom, the Netherlands, Japan, the United States, and Germany. By economic activity, equity capital investments were channeled mainly to manufacturing; financial and insurance; construction; wholesale and retail trade; and real estate activities.
Investments in debt instruments increased 90 percent percent to $869 million from $458 million on significant inter-company borrowings, especially in the transportation and storage, and construction industries.
Reinvestment of earnings, meanwhile, declined 17 percent to $51 million.
Equity capital investments in the first nine months reached $1.4 billion due to the 38 percent increase in gross placements to $2.2 billion, which exceeded withdrawals of $789 million.
The equity capital investments came largely from the United States, Japan, the United Kingdom, the Netherlands and Singapore. Investments were channeled mainly to manufacturing; financial and insurance; real estate; wholesale and retail trade; and construction activities.
Meanwhile, non-residents’ net investments in debt instruments reached $2.5 billion, down 16 percent from the previous year’s level of $3 billion. Reinvestment of earnings fell 11.7 percent to $575 million.
Foreign direct investments in 2014 posted a record-high net inflow of $6.2-billio, well above the target of $4.4 billion. The 2014 figure was also 66 percent higher than the $3.737-billion net inflow registered in 2013.
Bangko Sentral in October 2014 originally targeted the net FDI in 2015 to reach $5.3 billion. It revised revised the goal upward in May this year to $6 billion, taking into account the expected global growth recovery in 2015.
The Bangko Sentral reviewed the FDI target in May and October, along with other data, such as the balance of payments, foreign portfolio investments and remittances.
Bangko Sentral’s statistics on foreign direct investments cover actual investment inflows, which could be in the form of equity capital, reinvestment or earnings, and borrowings between affiliates. In contrast to investment data from other government agencies, the central bank’s FDI data include investments where ownership by the foreign enterprise is at least 10 percent.
Meanwhile, FDI data of investment promotion agencies, like the Board of Investments and Philippine Economic Zone Authority, do not make use of the 10-percent threshold and include borrowings from foreign sources that are non-affiliates of the domestic company.