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Foreign Direct Investments Start Strongly in 2012; January Net Inflows Reach US$766 Million

04.12.2012

Foreign direct investments (FDIs) posted net inflows amounting to US$766 million in January 2012, almost four times higher than the year-ago level of US$214 million. This was achieved as a result of net  equity  capital  inflows which  stood at  US$739  million  during  the  month from only US$31 million in January 2011. In particular, gross equity capital placements reached US$761 million due to inflows arising mainly from the final tranche of the share purchase agreement for the acquisition of shares of stock by a foreign firm in a local beverage manufacturing company. The bulk of the equity inflows came from the U.S., Australia, Kuwait, and Canada. These were primarily directed to the following sectors: manufacturing, wholesale and retail trade, financial and insurance activities, real estate, and mining. Positive domestic economic developments, including strong external payments dynamics and favorable corporate earnings for 2011, helped boost investor sentiment.

Reinvested earnings reached US$32 million in January 2012 as foreign enterprises opted to retain their earnings locally, reflecting improving business sentiment.

Meanwhile, the other capital account—consisting largely of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines—reversed  to  a  small net  outflow  of  US$5  million  from  a  net  inflow  of US$149 million in the same period a year ago. The outflow was due to the repayment of loans by local subsidiaries to their parent companies and to higher trade credits extended to affiliates abroad.

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