Foreign direct investments (FDI) registered net inflows of US$1.2 billion for January-November 2012, slightly higher by 1.1 percent than the level posted in the comparable period of the previous year.1
By FDI component, net equity capital placements—which went up by almost three-fold to reach US$1.3 billion from US$469 million in the same period in 2011—accounted for the bulk of FDI for the eleven-month period. On a gross basis, equity capital placements doubled to US$1.6 billion from its year-ago level of US$885 million, spurred mainly by the encouraging macroeconomic environment. The bulk of these equity capital inflows came from the U.S., Australia, the Netherlands, Japan and the British Virgin Islands. By sector, investments were primarily channeled to the manufacturing, real estate, wholesale and retail, mining and quarrying, and financial and insurance sectors.
Also contributing to the increase in net FDI inflows for the first eleven months of 2012 were reinvested earnings, which amounted to US$176 million. However, the year-to-date level was lower by 48.2 percent relative to the US$340 million reported in the same period in 2011.
Meanwhile, the other capital account—consisting mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines—reversed to a net outflow of US$224 million from a net inflow of US$410 million in the same period a year ago. The turnaround in the other capital account was due largely to resident companies’ repayment of their intercompany loans and extension of trade credits to their direct investors abroad, as well as lower intercompany loan availments.
For the month of November 2012, FDI posted net inflows of US$102 million, with all components of FDI posting positive balances. This was however lower by 72.1 percent than the previous year’s level of US$366 million. Gross placements of equity capital reached US$100 million during the month, lower than the US$310 million posted in the comparable period in 2011. 2 The bulk of investments coming from the US, Hong Kong, and Australia were directed mainly to real estate, manufacturing, and mining sectors. Similarly, the reinvested earnings and other capital accounts registered net inflows amounting to US$40 million and US$28 million, respectively.
1 BSP statistics on FDI covers actual investment inflows. On the other hand, investment data from other government sources have different coverage. For instance, the BSP’s FDI data includes investments, where ownership by the foreign enterprise is at least 10 percent. FDI could be in the form of equity capital, reinvested earnings, and borrowings between affiliates. Meanwhile, FDI data of Investment Promotion Agencies (IPAs) does not make use of the 10 percent threshold. In addition, investments could include borrowings from foreign sources that are non-affiliates of the domestic company. Lastly, the BSP’s FDI data is presented in net terms (i.e., equity capital placements less withdrawals), while the IPAs’ FDI does not account for equity withdrawals.
2 Of the US$310 million equity placements in November 2011, US$258 million represents the reacquisition by a foreign firm of its stake in a local telecommunications company.