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Net Foreign Direct Investment Surpasses US$1 Billion in the First Seven Months of 2006

10.10.2006

Net foreign direct investment (FDIs) flows for July 2006 rose more than threefold from the same period last year to US$158 million, bringing the cumulative seven-month FDI flows to US$1.15 billion.  The country’s strong economic fundamentals (e.g., improving fiscal performance, easing inflation rate) bolstered FDI during the review period.  The BSP expects net FDIs for 2006 to reach US$1.90 billion.

FDI flows during the seven-month period posted a year-on-year growth of 60.3 percent on account of the reversal of the “other capital” account to a surplus of US$773 million from a net outflow of US$131 million in the comparative period a year ago. Transactions in the “other capital” account which comprised essentially of intercompany borrowing/lending of funds between foreign direct investors and their local subsidiaries, branches or affiliates in the Philippines, involved investments inflows into automotive and electronic firms.  The continued improvement in the “other capital” account was more than sufficient to cover for the net outflows in the reinvested earnings account amounting to US$27 million.

Net equity capital, while lower than year-ago level, remained in surplus at US$408 million during the seven-month period.  Among the industries which benefited from these investments were: manufacturing (e.g., cigarette paper mills, chemicals, health-care, electronics, airconditioning system, steel products); services (e.g., business process outsourcing, resort facilities, engineering, construction, facilities management); financial intermediation and real estate.

Major investors came from the U.S., Japan, Federal Republic of Germany, United Kingdom, Switzerland, Singapore, Netherlands and South Korea.

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