Net foreign equity capital amounted to US$738 million during the first four months of 2007. This was 24 percent higher than the level posted in the same period last year. Specifically, equity capital placements reached US$827 million, with the bulk of the investments coming from the U.S., Japan, Singapore, South Korea, and the British Virgin Islands. Industries which benefited from these inflows were manufacturing (electronics, health and chemical products), services (international courier, information technology development), mining, real estate, financial intermediation, agriculture and construction.
Meanwhile, the other capital account–consisting mainly of loans granted by head offices to their subsidiaries in the Philippines–reached US$16 million, lower than last year’s level following repayment by some subsidiaries of their maturing liabilities. Meanwhile, payments of dividends to investors offset retained earnings, resulting in a balanced position for the reinvested earnings account.
These developments brought the cumulative FDI net inflows for the period January-April to US$754 million, 4.8 percent lower than the level recorded during the comparable period a year ago. In April, foreign direct investments (FDI) posted a net inflow amounting to US$44 million. This was lower compared to the net inflow in the same month last year as investors stayed on the sidelines ahead of the electoral exercise in May.
The country’s solid macroeconomic fundamentals and the credit outlook upgrade in June by the Japan Credit Rating Agency (JCRA) from stable to positive are expected to boost investor confidence in the economy in the months ahead, and promote greater inflows of foreign direct investment.