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FDI Net Inflows Rise by 27 Percent in March 2018; First Quarter 2018 Level Posts US$2.2 Billion

06.11.2018

Foreign direct investments (FDI) net inflows reached US$682 million in March 2018, representing a 27 percent growth from the US$537 million recorded in the same period last year.1,2  FDI inflows rose during the month as net equity capital increased markedly on the back of higher gross placements of equity capital (US$351 million from US$51 million) and lower withdrawals (US$33 million from US$42 million). Equity capital infusions came mostly from Singapore, Hong Kong, Japan, the United States, and Sweden. These were channeled largely to manufacturing; real estate; art, entertainment and recreation; and financial and insurance activities. Non-residents’ investments in debt instruments issued by local affiliates (or intercompany borrowings) posted net inflows of US$301 million, albeit lower by 36.1 percent compared to its year-ago level.  Meanwhile, reinvestment of earnings increased by 12.6 percent to US$63 million in March 2018 from US$56 million in March 2017. 

For the first quarter of 2018, FDI totaled US$2.2 billion of net inflows, an increase of 43.5 percent from US$1.5 billion in the comparable period last year. This reflected investors’ continued positive outlook on the Philippine economy on the back of sound macroeconomic fundamentals and robust growth prospects. Net equity capital increased more than sixfold to US$887 million from a year ago as gross placements of US$996 million more than compensated for the withdrawals of US$109 million.  Equity capital placements originated mainly from Singapore, Hong Kong, China, Japan, and Taiwan. Bulk of said placements were invested in manufacturing; financial and insurance; real estate; arts, entertainment and recreation; and electricity, gas, steam and air-conditioning supply activities. Net investments in debt instruments reached US$1.1 billion, a decrease of 8.2 percent from US$1.2 billion in the previous year. Reinvestment of earnings was steady at US$193 million.

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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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