Net foreign equity capital during the first semester more than doubled to US$1.6 billion from only US$781 million during the same period in 2006. 1 Gross equity capital placements which aggregated US$1.7 billion were infused mainly in manufacturing (electronics, health and chemical products), services (international courier, information technology development), construction, mining, real estate, financial intermediation, and agricultural industries. Bulk of the investments came from the U.S., Japan, Singapore and South Korea.
Meanwhile, repayments by local subsidiaries of their intercompany loans to their mother companies led to the reversal in the other capital account to a net outflow of US$372 million during the six-month period. Other capital account consists primarily of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines. On the other hand, the reinvested earnings account, though minimal, remained in surplus at US$20 million in the first half of 2007.
Despite the repayment of intercompany loans, the cumulative six-month net foreign direct investments (FDI) posted a net inflow of US$1.2 billion. The first semester FDI net inflows were higher by 16.0 percent compared to the same period in 2006.
The macroeconomic gains realized in the first semester, such as the strong external payments position, decelerating inflation, and the robust second quarter GDP growth are expected to provide more confidence-boosting support to the country’s investment landscape.
Reflects adjustment after audit; net equity capital outflow in May 2007 was revised downward by US$261 million to reflect reclassification of outflow from non-residents’ withdrawal of equity capital to residents’ investments abroad.