Record high: Foreign direct investments rise 70%

MANILA, Philippines – Money pumped by foreign investors into the country reached $6.2 billion in 2014, a 65.9% increase from 2013’s $3.7 billion, the Bangko Sentral ng Pilipinas (BSP) reported Tuesday, March 10.

The record high foreign direct investments (FDI) were buoyed by strong investors’ confidence in the country’s solid macroeconomic fundamentals, BSP added.

Also in 2014, net equity capital infusion rose by 206.7% to $2 billion from $664 million in 2013 due to the 6.2% increase in equity capital placements and the 67.8% decline in equity capital withdrawals.

Equity capital investments came mostly from the United States, Hong Kong, Singapore, Japan, and the United Kingdom, and channeled mainly to financial and insurance; manufacturing; real estate; mining and quarrying; and wholesale and retail trade sectors.

Moreover, investments in debt instruments (or intercompany borrowings), grew by 26.1% to $3.3 billion. Meanwhile, reinvestment of earnings expanded by 94.8% to $819 million during 2014.

Five-fold strong

For December 2014, FDI net inflows reached $557 million, more than 5-fold the $102 million recorded in the same month a year ago.

Net equity capital infusion contributed largely to the increase in FDI net inflows in December, reversing the $482 million net inflows from $60 million net outflows for the same period in 2013.

The increase in net equity capital investments was brought about by the 1,465.7% expansion in equity capital placements and the 10.7% decline in equity capital withdrawals, BSP said. 

The bulk of equity capital investments in December came largely from the US, Hong Kong, the United Kingdom, Republic of Korea, and Singapore, and such was channeled to  financial and insurance; mining and quarrying; real estate; manufacturing; and information, and communication sectors. 

Reinvestment of earnings, meanwhile, increased by 21.7% to $56 million from $46 million.   

Also, the decline in investments in debt instruments to $19 million from $116 million a year ago partially tempered the growth in FDI in December, as significant repayments for intercompany loans ($270 million) were made during the month, BSP said.

While the government keeps on touting foreign investors’ confidence in the country, the Joint Foreign Chambers (JFC) in the country said though that FDI should be around 10% instead of about 6%.

“The Philippines is not getting its share of foreign direct investment, particularly among ASEAN countries such as Vietnam,” Australian and New Zealand Chamber of Commerce President Ian Porter previously said.

The JFC presidents added that restrictions on foreign investments bar the maximum flow of investments. The Constitution restricts foreigners to 40%-ownership of a corporation. The restrictions on mining are also hurting the economy, they said. – Rappler.com