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Net Inflows of Foreign Direct Investments Continue in February

05.10.2012

Foreign direct investments (FDI) registered net inflows of US$84 million in February 2012, due mainly to inflows of equity capital and reinvested earnings. During the month, gross placements of equity capital amounted to US$132 million, nearly five times higher than the level recorded last year. The bulk of the inflows (US$100 million) represented final payment for the acquisition of shares by a foreign firm in a local beverage manufacturing company. Meanwhile, investments in other capital reversed to a net outflow of US$21 million from the US$94 million net inflows posted in the same period a year ago. However, relative to last year’s level, total FDI net inflows were lower by 30.6 percent.

Net FDI inflows for the first two months of 2012 summed up to US$850 million, almost three times higher than the US$335 million net inflows recorded in the same period in 2011. The respectable growth of FDI reflected favorable investor sentiment as the country’s macroeconomic fundamentals remained strong amid continuing concerns over the sovereign debt crisis in some parts of Europe and the moderation in global economic activity.

In  particular,  gross  equity  capital  placements  reached  US$893  million,  nearly 14 times higher than the year-ago level of US$63 million. Equity capital infusion for January – February 2012 came mainly from the U.S., Australia, Japan, and Kuwait. The sectors that benefitted from these inflows were the manufacturing, wholesale and retail trade, real estate, financial and insurance services, mining and quarrying, and information and communication.

Reinvested earnings amounted to US$60 million, 20 percent higher than the US$50 million level posted in the same period in the previous year. This developed as foreign investors opted to retain some of their profits in domestic firms, encouraged by positive macroeconomic developments and favorable corporate earnings prospects.

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  net  outflow  of  US$26  million  from  a  net  inflow  of US$243 million in the same period a year ago, due mainly to repayments of intercompany loans by local subsidiaries/affiliates to their parent companies abroad.

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