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Foreign Direct Investments Yield Net Inflows in January 2011

04.12.2011

Foreign direct investments (FDIs) in January 2011 recorded net inflows amounting to US$207 million, up by 21.8 percent from the year-ago level of US$170 million. All FDI components registered net inflows during the month, reflecting buoyant prospects for the global economy during the year. The strong economic performance in 2010, combined with a cautiously optimistic outlook in 2011, also helped drive FDI inflows into the country.

Net equity capital inflows rose to US$25 million for the month, a reversal of the US$27 million net outflow in January last year. In particular, gross equity capital placements reached US$31 million, almost twice the US$17 million recorded a year ago. These were channeled largely into real estate, mining, manufacturing (chemical products, iron and steel casting), and administrative and support service activities (call center activities/BPOs). The bulk of these inflows came from the U.S., Japan, Singapore, and Hong Kong.

Net inflows of reinvested earnings reached US$64 million, lower by 28.9 percent than the level recorded in the same period last year. This developed as foreign enterprises held their earnings in local corporations in light of the country's improving business sentiment.

Meanwhile, the other capital account-which consists largely of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines-also registered a net inflow of US$118 million. This was attributed to higher trade credits extended to Philippine-based subsidiaries/affiliates by their parent companies abroad.

FDI flows are expected to remain positive in 2011 with the continued global economic recovery and the National Government's thrust for public-private partnerships.

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