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FDI Post US$307 Million Net Inflows in July 2017

10.10.2017

Foreign direct investments (FDI) posted US$307 million net inflows in July 2017, lower than the US$493 million net inflows recorded in the same month last year. 1, 2  This was mainly on account of the decline in investments in debt instruments to US$105 million from US$407 million, which outweighed the more than five-fold increase in net equity capital.  The surge in net equity capital to US$131 million was due mainly to the increase in equity capital placements to US$170 million, which more than compensated for the withdrawals of US$39 million.  Equity capital infusions in July came mostly from Singapore, the United States, the Netherlands, Japan and Taiwan.  These were invested mainly in manufacturing; real estate; wholesale and retail trade; financial and insurance; and electricity, gas, steam and air conditioning supply activities.  Meanwhile, reinvestment of earnings expanded by 11.5 percent to US$71 million during the month. 

As a result of these developments, FDI net inflows reached US$3.9 billion in the first seven months of 2017, 16.5 percent lower than the US$4.7 billion net inflows last year. Net equity capital registered lower inflows at US$272 million from US$1.5 billion last year.  Equity capital placements during the period emanated mainly from Singapore, the United States, Japan, Hong Kong and the Netherlands. These were infused largely in real estate; manufacturing; financial and insurance; electricity, gas, steam and air conditioning supply; and wholesale and retail trade activities.  Investment in debt instruments increased by 13.9 percent to US$3.1 billion from US$2.8 billion last year. Reinvestment of earnings also expanded by 9.3 percent to US$487 million during the period.

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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.

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