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Foreign Direct Investments Yield Net Inflows In First Half of 2009

09.10.2009

Foreign direct investments (FDI) for the first six months of 2009 recorded a net inflow of US$892 million as equity capital and reinvested earnings posted positive balances, moderating the net outflows in other capital, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. announced today.  The level was nearly 50 percent higher than the net inflow of US$605 million realized in the comparable period a year ago.  In June, FDI posted a US$133 million net outflow, mainly on account of intercompany loan repayments to foreign direct investors.

FDI net inflows for the period January - June 2009 were largely in the form of equity capital amounting to US$996 million.  Gross equity capital placements for the first half of 2009 totaled US$1.1 billion, more than twice the year-ago level.  This reflected favorable investor sentiment given the emerging outlook on improving global economic conditions. These investments came from the U.S., Japan, Hong Kong and the Netherlands and were directed mainly to the manufacturing, real estate, construction, services, financial intermediation, mining and trade/commerce sectors.

Reinvested earnings for the first half of 2009 reached US$88 million, a reversal of the US$184 million net outflow posted a year ago, as corporate performance turnouts were better-than-expected, prompting investors to retain part of their earnings in local enterprises/corporations.

Meanwhile, the other capital account, consisting mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines, reversed to a net outflow of US$192 million, compared to the US$407 million net inflow during the comparable period in 2008.  The outflows were attributed to the higher trade credits extended to affiliates abroad and intercompany loan repayments to foreign direct investors.

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