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Net Foreign Direct Investment Inflows Climb to US$1.9 Billion For the First Nine Months of 2007


Foreign direct investments (FDI) continued to record a net inflow of US$44 million in September 2007 due to sustained inflows of equity capital and reinvested earnings.  This monthly level was 77.3 percent lower than the level posted in the same month in 2006. During the nine-month period from January-September, however, FDI net inflows aggregated US$1.9 billion, higher by 22.3 percent compared to the US$1.6 billion recorded in the same period a year ago.       

Behind the sustained net FDI inflows in September 2007 were net equity capital placements of US$95 million that were mostly infused into the real estate and manufacturing sectors.  The net inflow in the reinvested earnings account, amounting to US$20 million also contributed to this development.  These combined inflows more than offset the net outflow of US$71 million in other capital investments.           
On a cumulative basis, net FDI inflows from January – September 2007 consisted largely of net equity capital placements by foreign investors which aggregated US$1.8 billion.  Gross equity capital placements reached US$2.0 billion. These were absorbed by the manufacturing (electronics, health and chemical products, food, automotive sensors, decorative crafts), services (international courier, information technology development, multimedia service provider), construction, mining, real estate, financial intermediation, and agricultural industries.  The bulk of these inflows came from the U.S., Japan, Singapore, South Korea, Hong Kong, Germany, and the U.K.

The reinvested earnings account likewise posted a cumulative net inflow of US$343 million during the review period as foreign investors opted to retain their earnings in local enterprises/corporations given continued favorable economic prospects. 

Meanwhile, the other capital account―comprising largely of intercompany lending between foreign direct investors and their subsidiaries/affiliates in the Philippines ― reversed to a net outflow of US$229 million in the first nine months of 2007 from the year-ago surplus of US$122 million, following repayment of loans by subsidiaries to their parent companies. 

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