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Foreign Direct Investments Post Net Inflows in October; Year-to-Date Net Inflows at US$1.3 Billion

01.12.2010

Foreign direct investments (FDI) in October 2009 yielded a net inflow of US$59 million, in contrast to the US$62 million net outflow posted in the same month a year ago.  All FDI components posted net inflows during the month, reflecting favorable investor sentiment on the country’s underlying macroeconomic fundamentals, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. announced today. In particular, net inflows from equity capital amounted to US$41 million, a year-on-year increase of more than a hundred percent, with equity capital infusion coming from Hong Kong, the U.S., and Japan.  The major recipients of these inflows were the mining, construction and financial intermediation sectors. Reinvested earnings and other capital investments also posted net inflows of US$11 million and US$7 million, respectively. 

As a result, the FDI net inflows from January to October 2009 reached US$1.3 billion, higher by 17.9 percent from the year-ago level, as both equity capital and reinvested earnings recorded net inflows.  Gross equity capital placements for the ten-month period reached US$1.5 billion, higher by 22.4 percent when compared to the level posted a year ago.  The bulk of the investments came from the U.S., Japan, Hong Kong, and the Netherlands and was directed to the manufacturing, real estate, construction, services, financial intermediation, mining, trade/commerce, and transport/storage/communications sectors.

Reinvested earnings posted a net inflow of US$125 million during the first ten months of 2009, a reversal of the US$131 million net outflow in the same period a year ago, as investors were encouraged to retain part of their earnings in local enterprises/corporations given the Philippine economy’s resilience amidst challenging global economic conditions.   Meanwhile, the other capital account (consisting mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines) recorded a net outflow of US$157 million compared to the US$197 million net inflow in the same period in 2008.  Most of the outflows were traced to higher trade credits extended by Philippine-based subsidiaries/affiliates to parent companies abroad.

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