Foreign direct investments (FDI) recorded net inflows of US$756 million in November 2016, higher by 59.4 percent than the US$474 million posted in the same period in 2015.1, 2 The bulk of the net inflows during the month was in the form of debt instruments (or intercompany borrowings), which amounted to US$544 million, about three times the US$185 million recorded in November 2015. This more than compensated for the 34.7 percent decline in net equity capital investments to US$154 million from US$236 million. In gross terms, equity capital placements rose by 77.9 percent to US$437 million while withdrawals increased by more than 28 times its level a year ago to reach US$283 million. Equity capital infusion came mostly from Hong Kong, the United States, Taiwan, Germany, and Czech Republic. These were invested mainly in arts, entertainment and recreation; financial and insurance; real estate; wholesale and retail trade; and professional, scientific and technical activities. Reinvestment of earnings grew by 9.5 percent to US$58 million during the month.
On a year-to-date basis, net FDI inflows registered a year-on-year increase of 25.4 percent to reach US$7 billion for the first eleven months of 2016. The continued FDI inflows were buoyed by investors’ confidence in the economy on the back of sound macroeconomic fundamentals and sustained growth potential. Net availments of debt instruments increased by 44.4 percent to US$4.5 billion from US$3.1 billion in the comparable period in 2015. In addition, net equity capital investments grew by 3.4 percent to US$1.8 billion. This developed as gross equity capital placements of US$2.4 billion exceeded withdrawals of US$555 million. The bulk of equity capital placements emanated largely from Japan, Hong Kong, Singapore, the United States, and Taiwan, and was channeled mainly to financial and insurance; arts, entertainment and recreation; manufacturing; real estate; and construction activities. Reinvestment of earnings reached US$663 million during the period.
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 cover 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.