Foreign direct investments (FDI) net inflows increased by 7 percent in February 2017 to US$366 million from US$342 million in the same period in 2016.1,2 More than two-thirds of FDI net inflows were in the form of non-residents’ placements in debt instruments issued by local affiliates (intercompany borrowings) which increased by 160.7 percent to US$255 million from US$98 million in the previous year. Net equity capital infusion amounted to US$45 million, as equity capital placements of US$79 million more than offset the US$33 million withdrawals. The bulk (84.3 percent) of gross equity capital investments were sourced from Japan, Hong Kong, and the United States. Equity capital investments for the period were channeled primarily to wholesale and retail trade; real estate; manufacturing; financial and insurance; and art, entertainment and recreation activities. Meanwhile, reinvestment of earnings grew by 11.3 percent to US$66 million from US$59 million in February 2016.
Year-to-date, FDI net inflows amounted to US$1.1 billion, representing an 11 percent year-on-year growth, in the first two months of 2017. Investment inflows continued as investors remain confident in the Philippine economy on the back of strong macroeconomic fundamentals. Net placements in debt instruments increased by 133.2 percent to US$821 million from US$352 million in the comparable period last year. Equity capital investments recorded net inflows of US$93 million, as equity capital placements reached US$142 million while withdrawals amounted to only US$49 million. Equity capital placements during the period came mostly from Japan, Hong Kong, the United States, Germany, and Singapore. The said placements were largely invested in real estate; wholesale and retail trade; financial and insurance; information and communication; and manufacturing activities. Reinvestment of earnings for the first two months of 2017 reached US$137 million, higher by 3.3 percent from last year’s level.
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.