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Foreign Direct Investments Grow by 17.9 Percent in February 2015; Year-to-Date Net Inflows Reach US$622 Million


Foreign direct investments (FDI) rose by 17.9 percent in February 2015 to reach US$359 million from US$305 million in the same period the previous year. 1,2 ; This was due largely to the 184.7 percent increase in net equity capital to US$179 million as gross equity capital placements expanded by 103.6 percent while withdrawals declined by 59.4 percent.  The bulk of these equity capital investments—emanating mainly from the United States, Spain, the United Kingdom, Japan and Singapore—was channeled primarily to manufacturing; electricity, gas, steam and air conditioning supply; financial and insurance; transportation and storage; and professional, scientific and technical activities.  Meanwhile, non-residents’ investments in debt instruments (or lending by parent companies abroad to their local affiliates to fund existing operations and business expansion) amounting to US$122 million were lower by 29.5 percent compared to the level registered in the same month in 2014. Similarly, reinvestment of earnings decreased by 15.9 percent to US$58 million.

On a year-to-date basis, FDI net inflows reached US$622 million in the first two months of the year. This, however, was 48.6 percent lower than the US$1.2 billion net inflows recorded in the same period last year as all FDI components posted lower net inflows. Non-residents’ investments in debt instruments, which accounted largely for the decline, contracted by 61.8 percent (from US$757 million to US$289 million) due to lower debt availments during the period January-February 2015. Net equity capital also declined by 22.4 percent (from US$264 million to US$205 million). Equity capital investments during the period—which came mostly from the United States, Spain, Singapore, Japan and Germany—were channeled mainly to manufacturing; electricity, gas, steam and air conditioning supply; financial and insurance; real estate; and transportation and storage activities. Meanwhile, reinvestment of earnings for the first two months of 2015 reached US$128 million, lower by 32.1 percent. 


1 The BSP adopted the Balance of Payments, 6th edition (BPM6) compilation framework effective 22 March 2013 with the release of the full-year 2012 and revised 2011 BOP statistics.  On 21 March 2014, the BSP released the BPM6-based series from 2005-2013. The major change in FDI compilation is the adoption of the asset and liability principle, where claims of non-resident direct investment enterprises from resident direct investors are now presented as reverse investment under net incurrence of liabilities/non-residents’ investments in the Philippines (previously presented in the Balance of Payments Manual, 5th edition (BPM5) as negative entry under assets/residents’ investments abroad).  Conversely, claims of resident direct investment enterprises from foreign direct investors are now presented as reverse investment under net acquisition of financial assets/residents’ investments abroad (previously presented as negative entry under liabilities/non-residents’ investments in the Philippines). 

BSP statistics on FDI covers actual investment inflows, which could be in the form of equity capital, reinvestment of earnings, and borrowings between affiliates.  In contrast to investment data from other government sources, the BSP’s FDI data include investments where ownership by the foreign enterprise is at least 10 percent. Meanwhile, FDI data of Investment Promotion Agencies (IPAs) do not make use of the 10 percent threshold and include borrowings from foreign sources that are non-affiliates of the domestic company. Furthermore, the BSP’s FDI data are presented in net terms
(i.e., equity capital placements less withdrawals), while the IPAs’ FDI do not account for equity withdrawals.

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