Net inflows of foreign direct investment (FDI) into the country for the period January to September 2005 expanded by 68.8 percent to US$812 million from the year-ago level of US$481 million. Higher net FDI flows year-to-date were attributed to net inflows of equity capital which remained strong, expanding by 45.3 percent to reach US$933 million due to the combined effects of higher equity placements and lower withdrawals. Fresh equity capital infusion was directed to the manufacturing sector (US$506 million); real estate (US$91 million); and services (US$16 million), with the U.S. and Hong Kong as the major investing countries.
Another contributory factor to the nine-month expansion in foreign direct investment flows was the substantial decline in the net outflow in the “other capital” component of FDI which comprised of inter-company borrowings between investee companies and their corresponding foreign direct investors to US$112 million from the year-ago level of US$259 million.
Higher net inflows of FDI in prior months more than compensated for the US$87 million net contraction in September. While net equity capital infusion in September remained in surplus, this was not adequate to offset the net outflow in the inter-company accounts during the month.