Foreign direct investments (FDI) yielded net inflows of US$1 billion in April 2018 as positive balances were recorded for all FDI components during the month.1,2 The bulk of the net inflows in April 2018 was in the form of debt instruments (or lending by foreign companies abroad to their local affiliates to fund existing operations and business expansion), which amounted to US$705 million. Net investments in equity capital amounted to US$247 million as gross equity capital placements increased more than three times to US$262 million from US$84 million, while withdrawals remained broadly low at US$15 million. Equity capital placements emanated largely from Singapore, Hong Kong, Netherlands; the United States and Japan. These were mainly invested in manufacturing; arts, entertainment and recreation; real estate; financial and insurance; and wholesale and retail trade activities. Meanwhile, reinvestment of earnings by non-resident investors amounted to US$75 million during the period.
On a cumulative basis, FDI for January–April 2018 registered net inflows of US$3.2 billion, representing a growth of 24.3 percent from the comparable period in 2017. FDI inflows were boosted by continued favorable investor sentiment on the back of the country’s solid macroeconomic fundamentals and growth prospects. Net equity capital investments grew by more than five times to US$1.1 billion from US$199 million last year as gross placements of US$1.3 billion more than offset the withdrawals of US$124 million. Equity capital placements during the period were sourced largely from Singapore, Hong Kong, China, Japan, and the United States. These were infused primarily into manufacturing; financial and insurance; arts, entertainment and recreation; real estate; and electricity, gas, steam and air-conditioning supply activities. Debt instruments amounted to US$1.8 billion, lower by 14.5 percent than US$2.1 billion recorded in the comparable period last year. Meanwhile, reinvestment of earnings reached US$268 million in the first four months of 2018.
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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