Foreign direct investments (FDI) continued to post net inflows in May 2009 amounting to US$379 million, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. announced today. These inflows were more than seven times higher than the year-ago level, and reflected the favorable sentiment of foreign investors following early signs of stabilization in the global economy. The net inflows during the month resulted from the positive balances across all major FDI accounts. Net equity capital inflows, representing about 84 percent of total FDI, aggregated US$319 million in May 2009 following the purchase by a foreign enterprise of the shares of a local beverage manufacturing firm held by a local holding company. Reinvested earnings and other capital also recorded net inflows of US$13 million and US$47 million, respectively.
Given these positive developments, the year-to-date net FDI inflows reached US$1.0 billion, nearly twice the level recorded during the same period a year ago. Both equity capital and reinvested earnings recorded higher net inflows (US$946 million and US$80 million, respectively), which more than offset the contraction in the other capital account. In particular, a total of US$1.0 billion in gross equity capital placements were made by investors from Japan and the U.S., with the manufacturing, real estate, construction, financial intermediation, and trade/commerce sectors benefiting from these inflows.
Reinvested earnings during the five-month period reversed to a net inflow of US$80 million from the US$207 million net outflows posted a year ago. Encouraged by a string of positive news such as declining inflation, a healthy external payments position, and positive first quarter corporate earnings results, foreign investors opted to reinvest their retained earnings in local enterprises.
Meanwhile, the net inflow in the other capital account—which consists largely of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines—dropped to US$1 million, compared to net inflows of US$439 million during the same period in 2008. This developed as trade credits extended to affiliates abroad and intercompany loan repayments increased in the first five months of the year.