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Full-Year 2017 FDI Hit All-Time High of US$10 Billion

03.12.2018

Foreign direct investment (FDI) net inflows reached a record high of US$10 billion in 2017, up by 21.4 percent from the year-ago level.1,2 Investors continue to view the country as a favorable investment destination on the back of the country’s sound macroeconomic fundamentals and growth prospects. All major FDI components registered increases during the year. In particular, net equity capital investments expanded by 25.9 percent to US$3.3 billion, with gross placements of US$3.7 billion exceeding withdrawals of US$479 million. Equity capital placements originated largely from the Netherlands, Singapore, the United States, Japan, and Hong Kong SAR. By economic activity, equity capital placements were channeled mainly to gas, steam and air-conditioning supply; manufacturing; real estate; construction; and wholesale and retail trade activities. Net availment of debt instruments (consisting mainly of intercompany borrowings/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines) rose by 20.7 percent year-on-year to US$6 billion. Reinvestment of earnings increased by 9.3 percent to reach US$776 million during the year.

In December 2017, FDI registered US$699 million net inflows. This was lower, however, by 9 percent from the level recorded a year ago due largely to the 19.1 percent drop in net investments in debt instruments to US$335 million. Net placements of equity capital likewise declined moderately by 0.4 percent to US$305 million. On a gross basis, equity capital infusions reached US$328 million, originating mainly from Singapore, Japan, the Netherlands, the United States, and Luxembourg. The said placements were invested largely in manufacturing; real estate; wholesale and retail trade; information and communication; and arts, entertainment and recreation activities. Meanwhile, reinvestment of earnings grew by 24.1 percent to US$59 million in December 2017.

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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). 

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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