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Net Foreign Direct Investment Inflows Reach US$1.9 Billion For the First Ten Months of 2007

01.10.2008

The cumulative foreign direct investment (FDI) net inflows for the ten-month period yielded a surplus of US$1.9 billion. This developed even as FDI registered a net outflow in October 2007 driven by the US$92 million net outflow in the other capital account, representing intercompany loan settlement from Philippine subsidiaries to their foreign parent companies.   A net equity capital infusion of US$40 million, however, reduced the net outflow in FDI in October to US$56 million. The year-to-date FDI net inflow was slightly lower by 4.3 percent compared to the level posted in the same period a year ago.       

The FDI inflows for the period January - October 2007 consisted mainly of net equity capital placements of US$1.8 billion and reinvested earnings amounting to US$339 million. These collective inflows were moderated by the net outflow of US$321 million in other capital investments.
 
In particular, gross equity capital placements for the first ten months grew by 15.6 percent to reach US$2.1 billion. These were infused into the manufacturing (electronics, health and chemical products, food, automotive sensors, decorative crafts and molded plastic products), 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, South Korea, Hong Kong, Malaysia, Germany, and the U.K.

Meanwhile, the reinvested earnings account during the review period increased by 44.3 percent as existing foreign direct investors opted to retain part of their earnings in local enterprises/corporations. 

On the other hand, the reversal of the other capital account to a net outflow of US$321 million in the first ten months of 2007 from the year-ago surplus of US$318 million resulted mainly from the repayment of loans by subsidiaries to their parent companies. 

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