Foreign direct investments in PH up 94.9% in H1 2016

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Foreign direct investments in PH up 94.9% in H1 2016
FDI in the Philippines hit $4.2 billion from January to June this year, but investments slowed down by 40% in June

MANILA, Philippines – Foreign direct investments (FDIs) nearly doubled in the first half of the year, according to the latest data from the Bangko Sentral ng Pilipinas (BSP).

Data released by the BSP on Tuesday, September 13, showed that FDI inflows reached $4.2 billion for the first semester of 2016, 94.9% higher than the $2.2 billion recorded for the same period a year ago.

The strong results reflected investors’ confidence in the Philippine economy on the back of sound macroeconomic fundamentals and robust growth, the BSP said in a statement.

It also comes on the back of a relatively smooth political transition and strong spending which has fueled the economy’s 6.9% growth for the first half of the year.

Investments of parent companies abroad in debt instruments issued by local affiliates (or intercompany borrowings) were the biggest contributors to the increase, more than doubling to $2.4 billion from $1.1 billion last year.

Net equity capital also doubled, growing 112% on the combined effects of higher gross equity capital placements which hit $1.6 billion from the $884 million in 2015. This was coupled with lower gross equity capital withdrawals hitting $166 million from $203 million.

These equity capital placements came mainly from Japan, Singapore, Hong Kong, the United States, and Taiwan. They were channeled mainly into financial and insurance, real estate, manufacturing, construction, and accommodation and food service activities. 

Reinvestment of earnings, meanwhile, declined by 0.7%.

June downturn

Investments recorded in June, however, continued the downturn seen in May, falling by 40.9% to a net inflow of $238 million compared to the $404 million booked in June of last year.

In particular, equity capital placements of $36 million was lower than the equity capital withdrawals of $41 million, resulting in net outflows of $5 million from net inflows of $215 million for the same month last year, the BSP noted.

These equity capital investments originated largely from Japan, the US, Singapore, Hong Kong, and China.  These infusions were channeled mainly to real estate; electricity, gas, steam and airconditioning supply; information and communication; wholesale and retail trade; and manufacturing activities.

Investments in debt instruments rose by 49.4% to $182 million from $122 million in 2015, while reinvestment of earnings decreased by 7.8% to $62 million during the month. –

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