Foreign direct investments (FDI) net inflows reached US$6.2 billion in the first 10 months of 2016. This was 22.2 percent higher than the US$5.1 billion net inflows posted in the same period the previous year.1,2 Nearly two-thirds of FDI net inflows were in the form of availments of debt instruments by local affiliates (intercompany borrowings) which increased by 34.9 percent to US$3.9 billion from US$2.9 billion the previous year. Net equity capital, accounting for 27 percent of FDI net inflows during the period, grew by 9.3 percent to US$1.7 billion. The bulk of gross equity capital investments—emanating largely from Japan, Singapore, the United States, Hong Kong, and Taiwan—was channeled mainly to real estate; manufacturing; wholesale and retail trade; electricity, gas, steam and air-conditioning supply; and human health and social work activities. Meanwhile, reinvestment of earnings declined by 5.2 percent to US$605 million from US$637 million in the previous period.
For the month of October, FDI yielded net inflows of US$342 million. Investment inflows continued amid investors’ confidence in the resilience of the economy, backed by sound macroeconomic fundamentals. The FDI level in October, however, was 14.3 percent lower than the US$399 million net inflows posted during the same month in 2015.
Net availments of debt instruments amounted to US$225 million, lower by 20.3 percent compared with the US$282 million recorded in October 2015. Net equity capital investments increased by 10.2 percent to US$60 million as gross equity capital placements of US$84 million exceeded withdrawals of US$24 million. Gross equity capital placements came mostly from Germany, Taiwan, the United States, the Netherlands and Cayman Islands. These placements were infused in financial and insurance; manufacturing; real estate; construction; and accommodation and food service activities. Reinvestment of earnings totaled US$57 million during the month.
1 Based on the Balance of Payments and International Investment Position Manual, 6th edition (BPM6) which uses the asset and liability principle in the compilation of FDI statistics. Under the asset and liability principle, claims of non-resident direct investment enterprises from resident direct investors are 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 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).
2 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.