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Foreign Direct Investments Yield US$229 Million Net Inflows in March 2015; Q1 2015 Net Inflows Reach US$851 Million

06.10.2015

Foreign direct investments (FDI) yielded net inflows of US$229 million in March 2015. This was, however, lower by 54.6 percent relative to the level recorded in the comparable period last year.1,2 Net inflows across all FDI components were lower. Non-residents’ investments in debt instruments issued by local affiliates (or intercompany borrowings) registered US$123 million net inflows. Equity capital investments also posted net inflows of US$50 million. This was brought about by the gross equity capital placements of US$85 million in March 2015, which emanated largely from the United States, Japan, Singapore, France, and Germany and were channeled mainly to real estate; electricity, gas, steam and air conditioning supply; manufacturing; administrative and support service; and financial and insurance activities. Partly offsetting these placements were withdrawals of US$35 million. Meanwhile, reinvestment of earnings amounted to US$57 million.

On a cumulative basis, FDI registered net inflows of US$851 million for the first quarter of 2015, albeit lower by 50.4 percent compared to the US$1.7 billion net inflows posted in the same period last year. This developed as all FDI components recorded lower net inflows. In particular, non-residents’ net investments in debt instruments declined by 54.6 percent to US$412 million from US$907 million. Similarly, net equity capital investments contracted by 54 percent to US$254 million from US$553 million. Equity capital placements during the period, which were sourced mainly from the United States, Japan, Singapore, Spain, and Germany, were channeled primarily to manufacturing; electricity, gas, steam and air conditioning supply; real estate; financial and insurance; and wholesale and retail trade activities. Reinvestment of earnings amounted to US$185 million in the first quarter of 2015, lower by 27.7 percent than the level posted in the same period last year.

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1The 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). 

2BSP 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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