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Foreign Direct Investments Yield US$874 Million Net Inflows in April 2017; January-April Level Reaches US$2.4 Billion

07.10.2017

Foreign direct investments (FDI) continued to post net inflows amounting to US$874 million in April 2017 as all FDI components registered positive balances during the month. This, however, was 61.1 percent lower than the level recorded in the same period last year. 1,2  Net equity capital investments reached US$70 million from US$825 million in April 2016.  Gross equity capital placements of US$84 million, which exceeded withdrawals of US$14 million in April 2017, were channeled mainly to real estate; financial and insurance; electricity, gas, steam and air conditioning supply; manufacturing; and human health and social work activities.  The bulk of these equity capital placements during the period emanated largely from the United States, Japan, Singapore, France, and Hong Kong.  Investments in debt instruments (consisting mainly of intercompany borrowings/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines) also declined to US$723 million from US$1.3 billion last year.  Meanwhile, reinvestment of earnings increased by 9.3 percent to US$81 million during the month.

On a year-to-date basis, FDI for the first four months of 2017 likewise recorded net inflows of US$2.4 billion on the back of continued investor confidence in the country’s sound macroeconomic fundamentals.  The level, however, was lower by 32 percent compared to the US$3.6 billion posted a year ago following the decline in net equity capital investments to US$170 million from US$1.4 billion in January-April 2016.3   Equity capital placements during the period were sourced mainly from Japan, the United States, Singapore, Hong Kong and Germany. These were invested mainly in real estate; financial and insurance; wholesale and retail trade; manufacturing; and electricity, gas, steam and air conditioning supply activities. Meanwhile, net investments in debt instruments grew moderately by 2 percent to reach US$2 billion. Reinvestment of earnings reached US$274 million, higher by 7.5 percent than the US$255 million recorded in the same period last year.

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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.
3 Includes big-ticket equity capital placements from non-residents in local deposit-taking corporations amounting to about US$784 million (or 53 percent of gross placements) for the January-April 2016 period.

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