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Foreign Direct Investments Yield Net Inflows in November 2011

02.10.2012

Foreign direct investments (FDI) registered net inflows in November 2011 amounting to US$53 million. This level which was 82.6 percent lower than the US$304 million posted in the same month a year earlier, reflected weaker investor sentiment brought forth by the lingering eurozone sovereign debt crisis  even as the Philippine economy showed resilience amid a healthy external payments position and easing  price  pressures.   In particular, net inflows of equity  capital  declined  by 85 percent year-on-year to US$41 million. Moreover, the other capital account reversed to a net outflow of US$14 million from a net inflow of US$26 million in November 2010 due primarily to the intercompany loan repayments to foreign direct investors given adequate foreign exchange liquidity in the country. Meanwhile, reinvested earnings increased by more than sixfold to US$26 million from the year-ago level of US$4 million as foreign investors opted to retain earnings/profits in local enterprises.

On a cumulative basis, FDI for the first eleven months of 2011 posted net inflows of US$782 million.  This was lower by 38.5 percent than the US$1.3 billion realized in the comparable  period  a  year  ago as it reflected the transfer of ownership of shares of a mining corporation from a non-resident holder to its resident partner. The FDI level for January-November 2011 includes gross equity capital placements of US$550 million from the U.S., Japan, Republic of Korea, Hong Kong, and Singapore.  These were channeled mainly to the following sectors: manufacturing (semiconductors, wiring harness, garments/wearing apparel, iron and steel), real estate, mining and quarrying, electricity, gas, steam and air conditioning supply, wholesale and retail trade, and financial and insurance activities.

Meanwhile,   the   reinvested   earnings   account   for   the  period January-November 2011 increased by 44.8 percent to US$404 million from the US$279 million recorded in 2010. On the other hand, the other capital account (consisting mainly of intercompany borrowing/lending between foreign direct investors  and  their  subsidiaries/affiliates   in   the   Philippines)  recorded lower net inflows of US$244 million for the same period. The 52.7 percent decline was due to repayment of loans made by subsidiaries to their parent companies and higher trade credits extended to parent companies abroad.

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