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Foreign Direct Investments Reverse to Net Inflows in September 2011

12.12.2011

Foreign direct investments (FDI) recorded net inflows of US$166 million in September 2011, a reversal of the net outflows of US$2 million in the same month a year ago. In particular, net infusion of equity capital amounted to US$118 million, a turnaround from the US$22 million net outflows posted in the comparable period last year. This inflow arose largely from the acquisition of a significant number of shares by a global private equity firm in a local financial institution.  Reinvested earnings also improved to US$79 million during the month, three times higher relative to the year-ago level, as foreign investors opted to plow back earnings in local enterprises/corporations.

As a result of these developments, year-to-date net FDI flows reached  US$671 million.    This level, however, was lower by 32.9 percent compared to the US$1.0 billion net inflows realized in the same period last year, reflecting the challenging global economic conditions and strains in foreign financial markets. Gross equity capital placements in the first nine months of the year amounted to US$476 million. Investments largely came from the U.S., Hong Kong, Japan, South Korea, and Singapore.  These inflows were channeled to the following sectors: financial and insurance activities, real estate, manufacturing (wiring harness, iron and steel, and garments/wearing apparel), mining and quarrying, and electricity, gas steam and airconditioning supply.

The other capital account, consisting mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines, recorded US$241 million net inflows in January-September 2011. This was, however, more than two times lower than the year-ago level of US$552 million due to intercompany loan repayments and higher trade credits extended to affiliates abroad.

 Meanwhile, reinvested earnings during the nine-month period amounted to US$357 million, up by 35.7 percent compared to the US$263 million recorded in the same period in 2010.


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