Foreign direct investments hit $2.2B in April

MANILA, Philippines – Despite a volatile global economy, foreign investments continued to pour into the country in the first few months of the year.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Monday, July 11, showed that foreign direct investments (FDIs) increased dramatically in April 2016, netting a positive inflow of $2.2 billion.

The strong showing for the month is notable as it came right before the contentious elections, a period which analysts feared would see a slowdown caused by investor uncertainty.

April's result means that FDI inflows have hit a combined $3.5 billion for the first 4 months of the year compared to the $1.26 billion for the same period last year, the BSP said.

An increase in inflows was recorded in the first 4 months save for a slight downturn in February.

"The surge in inflows is reflective of the favorable investment climate as the country continues to post growth and shows even greater growth potential," the central bank noted.

The surge, the BSP pointed out, was led by investment in debt instruments, or lending by multinational parent companies to their subsidiaries in the Philippines.

From January to April 2016, the category accounted for $1.9 billion, more than double the $687 million recorded in the same period last year.

Net equity capital placements for the period also contributed, growing by 372.6% to $1.3 billion from the $279 million in January to April 2015.

This was on the back of the $1.4 billion received in gross equity placements compared to the $369 million recorded last year.

These investments came largely from Japan, Singapore, Hong Kong, the US, and Spain, and were channeled mainly into financial services, real estate and construction, and food and beverage sectors. Reinvestment of earnings by foreigners also totaled $255 million.

FDI inflows for April

April's performance was on the back of increases across all FDI components.

The majority of the net inflow was in the form of debt instruments which accounted for $1.3 billion. The figure is 4 times the $276 million recorded last year.

Net equity capital placements also helped the surge, totaling $839 million from just $39 million recorded in April 2015 while withdrawals amounted to $13 million.

These capital equity infusions came mostly from Japan, the US, Germany, the Netherlands, and Taiwan, according to the BSP.

The central bank noted that these investments were also mainly channeled through the financial and insurance sectors, as well as real estate, manufacturing, wholesale retail, and administrative support services.

The data showed that reinvestment by foreign investors also added $74 million to the country's coffers for the month.

The BSP is targeting FDI inflows of $6.3 billion this year, driven by the Duterte administration's push for infrastructure and its pledge to largely continue the macroeconomic policies of the previous government. ­– Rappler.com