Net foreign direct investment (FDI) flows into the country continued to rise in the first seven months of 2005 reaching US$499 million, more than twice the US$241 million net inflow in the same period last year.
Net equity capital inflows grew by 30.3 percent to US$594 million from US$456 million last year underpinned by the combined effects of higher placements and lower withdrawals. An influx of new investments flowed into the manufacturing, real estate, financial, and services (i.e., business product outsourcing) sectors coming mainly from Hong Kong and Japan, the country’s largest investors during the period.
Meanwhile, net inflows from reinvested earnings continued in the first seven months of the year although lower than last year, reflecting profitable foreign direct investment ventures in the country which encouraged investors to extend their investment dealings in the country’s prime industries. It is important to recognize that the 2005 reinvested earnings data include those of local banks only, since data on enterprises are not yet available. Recording of reinvested earnings for these companies will be made when their audited financial statements become available.
Another factor that contributed to the strong performance of FDI flows was the 65.8 percent reduction in the net outflow of the other capital component to US$101 million, due mainly to the decline in claims of resident firms on affiliated companies abroad.