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Net Foreign Direct Investments Higher in April 2008; First Four Months in Surplus at US$820 Million


Net inflows of foreign direct investments (FDIs) in April 2008 rose by more than fourfold to US$269 million as all FDI components posted hefty increases over their year-ago levels. This positive development brought the aggregate four-month FDI level to US$820 million. All FDI components for the period January – April 2008 posted net inflows but the levels were lower compared to those in the same period a year ago, due to the generally sluggish economic growth in major investor countries, particularly the United States, and the prevailing cautious investor sentiment amid global uncertainties. FDI flows into the country came from a high base last year due to a big-ticket investment in a local beverage company.

In April 2008, FDI net inflows in equity capital more than doubled from last year’s level to reach US$106 million, due mainly to higher gross equity capital placements aggregating US$127 million. Reinvested earnings and other capital also posted significant gains, recording higher net inflows of US$31 million and US$132 million, respectively (from US$10 million and US$2 million in April 2007).

Year-to-date, net inflows in equity capital amounted to US$299 million. Gross equity capital placements from January – April 2008 reached US$411 million and were mainly channeled to manufacturing (shipbuilding and repair, auto electronics parts & components), services (recreational/cultural), mining, construction (hotel/resort development, power plant facility), real estate, and financial institutions. Investments came mainly from Japan, Singapore, Germany, Malaysia, U.S., and South Korea.

Meanwhile, reinvested earnings in the first four months of the year amounted to US$131 million. This level was 7.7 percent lower than the level posted during the comparable period in 2007, as local companies repatriated some profits to their foreign investors. 

The other capital account—which consists largely of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines—also registered a net inflow of US$390 million in the first four months of the year, although lower relative to the US$573 million net inflow in the same period last year. This was due mainly to lower net loan availments by local subsidiaries from their foreign/parent companies.

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