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Net Foreign Direct Investment Flows in January-April 2006 Remain Positive

07.10.2006

Foreign direct investments (FDIs) in April 2006 posted a net inflow of US$70 million arising mainly from the 14.3 percent increase in net equity investments in the real estate and financial intermediation sectors, bringing the four-month FDI inflows to US$500 million. 

The 2.7 percent expansion in FDI inflows during the first four months of 2006 was a result of the higher surplus in the “other capital” account (representing inter-company accounts between investee companies and their corresponding foreign direct investors) amounting to US$184 million from only US$11 million in the comparable period in 2005.  The reinvested earnings account was likewise on the uptrend, as foreign banks opted to retain their earnings in their local branches. 

Investors remained upbeat on the country’s investment climate following an improved fiscal position arising from the surplus registered in April, strong macroeconomic fundamentals and better-than-expected first quarter performance of corporations. As a result, equity capital, though lower compared to the level during the same period a year ago, recorded a net inflow of US$280 million during the four-month period.  Long-term equity investments mainly coming from the U.S. and Japan were channeled to the following sectors: manufacturing, construction, real estate, and financial intermediation.

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