Foreign direct investments seen to hit $6.3B in 2016

MANILA, Philippines – More foreign direct investments (FDIs) are expected to flow into the country next year, the Bangko Sentral ng Pilipinas (BSP) said Tuesday, December 22.

FDI inflows would hit $6.3 billion next year from the projected $6 billion this year amid the volatile global financial environment.

BSP also sees FDI inflows rising to $6 billion this year from $5.5 billion last year.

The country’s strong macroeconomic fundamentals and the implementation of much needed infrastructure projects under the public private partnership (PPP) scheme are seen to buoy FDIs in 2016, the central bank added.
 
“This is line with the sustained positive developments in the domestic economy and some improvement in the global economic conditions, as well as the implementation of PPP projects that were awarded in 2014 and 2015,” BSP Department of Economic Statistics Director Zeno Ronald Abenoja said.

The FDIs would be channeled to manufacturing, electronics and motor parts, utilities like renewable energy and water works, as well as real estate and entertainment.

Bullish

The bullish business confidence is expected to support the continued entry of FDIs, despite the fact that the global financial environment is expected to remain volatile, Abenoja explained.

Latest data from the central bank showed a record $1.52 billion FDIs flowing into the country in September. This brought the net FDI inflow to $4.54 billion in the first 9 months of 2015 or 5.5% lower, compared to $4.8 billion in the same period last year. (READ: Foreign direct investments surge 123.4% in Sept)

Abenoja also cited the sustained economic expansion in the Philippines, with the country booking 67 straight quarters of gross domestic product (GDP) growth.
 
The country’s GDP growth accelerated to 6% in the third quarter of 2015 from the revised 5.8% in the second quarter amid robust domestic demand and improving government spending. (READ: PH GDP grows 6% in Q3)
 
“That is being supported by positive developments in the domestic economy, and the implementation of various PPP projects approved in recent quarters by the national government,” he said.
 
For his part, BSP Deputy Governor Diwa Guinigundo said strong FDI inflows, particularly in PPP projects are crucial in maintaining the momentum in the country’s continued economic expansion.
 
The country’s balance of payments (BOP) position is expected to post a surplus of $2.2 billion next year from $2 billion this year due to sustained leads from the exports of goods and services, cash remittances from Filipinos abroad, and higher FDI inflows.

"While the global economic outlook in 2016 is expected to improve slightly, uncertainty and caution still remain. Nevertheless, the Philippine economy is expected to exhibit continued resilience on the back of strong domestic economic activities,” Abenoja said.

Lower foreign exchange reserves

As for the country's gross international reserves (GIR), BSP has lowered the projected GIR this year as the Philippines' foreign exchange buffer continued to thin.

Abenoja said on Monday the central bank is now looking at a GIR level of $80.7 billion instead of the $81.6 billion for this year from $79.5 billion in 2014.