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Net Foreign Direct Investments in the First Five Months at US$725 Million

08.11.2008

Foreign direct investments (FDIs) for the first five months of 2008 amounted to a net inflow of US$725 million with all components of FDI continuing to post surpluses. This level, however, was lower than the net inflow of US$2.3 billion recorded in the comparable period a year ago.  This developed as the investment environment turned more cautious due to concerns about global financial market fragilities and the downturn in many advanced economies including the U.S.  In May, FDI posted a US$95 million net outflow, the first in eleven months, mainly as a result of intercompany loan repayments to foreign direct investors amounting to US$152 million.

Net inflows of FDI for the period January – May 2008 came largely in the form of equity capital amounting to US$322 million. Gross equity capital placements for the first five months of the year summed up to US$461 million and were channeled mainly 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 primarily from Japan, the U.S., Singapore, Germany, Malaysia, and South Korea.  Meanwhile, outflows in equity capital—mainly capital repatriation by non-resident investors from holding companies in the Philippines—amounted to US$139 million.

Reinvested earnings for the period January – May 2008 amounted to US$161 million, lower by 4.7 percent compared to the level posted in the same period in 2007 due to the repatriation of profits by local firms to their foreign investors. 

Other capital consisting mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines recorded net inflows of US$242 million This, however, was lower compared to the net inflow of US$586 million in the same period last year due to the combined effects of loan repayments and lower loan availments by local subsidiaries to/from their parent companies. 

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