Foreign direct investments (FDI) net inflows rose by 13.2 percent to reach US$685 million in January 2017. 1, 2 This developed as investors remain optimistic on the growth potential of the economy backed by strong macroeconomic fundamentals. In particular, non-residents’ investments in debt instruments (or lending by parent companies abroad to their local affiliates to fund existing operations and business expansion) grew by 122.6 percent to US$566 million from the year-ago level of US$254 million. Meanwhile, non-residents’ net equity capital placements declined by 82.8 percent due primarily to the drop in fresh equity capital infusions. The US$48 million net inflows of equity capital resulted as placements of US$63 million more than offset withdrawals of US$15 million. Equity capital placements during the month emanated largely from Germany, Singapore, Hong Kong, the United States, and Japan. These were channeled mainly to electricity, gas, steam and airconditioning supply; construction; wholesale and retail trade; administrative and support service; and financial and insurance activities. Reinvestment of earnings amounted to US$71 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 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.