Foreign direct investments (FDI) for the first five months of 2010 recorded a net inflow of US$446 million. The year-to-date level was lower by 68.0 percent compared to the same period last year. Investors stayed on the sidelines as they remained wary of potential spillovers of the Eurozone’s sovereign credit problems, notwithstanding the relatively peaceful conduct of the May 2010 local elections. In May, FDI posted a net outflow of US$35 million.
FDI net inflows for the period January-May 2010 stemmed largely from the improvement in the other capital account consisting mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines which reversed to a net inflow of US$330 million from a net outflow of US$38 million a year ago. Intercompany loan availments from foreign direct investors and lower trade credits extended to affiliates abroad contributed to this favorable development.
Net inflows of equity capital during the five-month period summed up to US$46 million, considerably lower than the US$1.5 billion recorded during the comparable period last year. It will be recalled that in the first five months of 2009, there were a number of equity capital infusions arising largely from the privatization of a local power corporation and the acquisition of a significant number of shares of a local beverage manufacturing firm.
Inflows during the review period came mostly from the U.S., Switzerland, Japan, Netherlands, Singapore and Hong Kong. These were directed to the manufacturing, services, real estate, financial intermediation, utilities, mining, and transportation/storage sectors.
Reinvested earnings also recorded net inflows of US$70 million, a reversal of the US$24 million net outflows posted a year ago.