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Foreign Direct Investment Inflows Continue in Q1 2009 Despite Global Economic Downturn

06.10.2009

Foreign direct investment (FDI) net inflows amounted to US$44 million during the first quarter of 2009.  Contributing to the first quarter net inflows were the positive balances registered in equity capital and reinvested earnings which more than offset the net outflow in other capital.   The cumulative FDI level through March represented a year-on-year decline of 83.5 percent from the comparable quarter a year ago.  In March, net FDI recorded an outflow of US$27 million.     

While investor sentiment continued to be marked by uncertainty and cautiousness given the recessionary conditions in the global economy, the country remained a recipient of equity capital which, in the first three months of the year, posted a net inflow of US$47 million.  This was, however, lower by 79.4 percent than last year’s level.  Equity capital inflows were channeled to the manufacturing (aluminum diecasts), real estate, financial intermediation, and trade/commerce sectors, mostly by investors from Japan and the U.S.  Meanwhile, reinvested earnings also posted a net inflow of US$47 million, a reversal of the US$249 million net outflow recorded during the same quarter in 2008.  Investors opted to retain earnings/profits in local banks and enterprises as the country showed signs of stabilization in the midst of the global financial crisis and economic downturn.      

Meanwhile, the other capital account—consisting largely of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines—reversed to a net outflow of US$50 million as a result of intercompany loan repayments and trade credits extended to affiliates abroad.

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