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Foreign Direct Investments Yield Net Inflows in the First Quarter of 2012


Cumulative net foreign direct investment (FDI) inflows for the first quarter of 2012 totaled US$850 million, registering a 72.4 percent increase from the US$493 million net inflows posted in the same period a year ago. The appreciable growth of FDI reflected positive investor sentiment owing to the country’s favorable macroeconomic fundamentals despite concerns over the deepening sovereign debt crisis in some parts of the euro zone area.

In particular, gross equity capital placements reached US$1.0 billion, almost six times higher than the year-ago level of US$176 million. A large chunk of the inflows for the first three months of 2012 was accounted for by the acquisition of shares by a foreign firm in a local beverage manufacturing company. Equity capital infusion in the first quarter of 2012 came mainly from the U.S., Australia, Netherlands, Singapore, and Japan. These inflows were primarily infused to the following sectors: manufacturing (food products, beverages, and electrical/electronic circuits), real estate, wholesale and retail trade, and financial and insurance services.

Reinvested earnings amounted to US$30 million, one third of the US$91 million level posted in the previous year.

The other capital account—which consists largely of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines—reversed to a net outflow of US$111 million from a net  inflow of US$251 million during the comparable period in 2011 due to intercompany loan repayments and higher trade credits extended to affiliates abroad.

For the month of March 2012, FDI recorded net inflows of US$14 million with the bulk of investments emanating mainly from equity capital. However, FDI net inflows during the month were lower than the US$158 million recorded a year ago. Net equity capital and reinvested earnings amounted to US$85 million and US$9 million, respectively, lower by 22 percent and 78 percent than the levels posted during the comparable period in 2011. The other capital account during the month reversed to a net outflow of US$80 million from a net inflow of US$8 million in the same period a year ago.

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