FDI Net Inflows Surge in October; First Ten Months Level Close to US$8 Billion

Foreign direct investments (FDI) net inflows rose threefold in October 2017 to US$2 billion from US$670 million registered in the comparable period in 2016.1,2 The upswing in FDI reflects continued investor confidence in the country’s strong macroeconomic fundamentals and growth prospects. More than three-fourths of FDI net inflows were in the form of equity capital, with gross placements rising markedly to US$1.6 billion from US$84 million a year ago. A significant portion of the equity capital placements were channeled to electricity, gas, steam and air-conditioning supply activities. The other sectors that received investment inflows were manufacturing; construction; real estate; and wholesale and retail trade. The top country sources were the Netherlands, Singapore, Kuwait, the United States, and Germany. Investments in debt instruments (or intercompany borrowings between foreign direct investors and their subsidiaries/affiliates in the Philippines) amounted to US$431 million, albeit lower by 22 percent than the previous year’s level. Meanwhile, reinvestment of earnings reached US$57 million during the month.

On a cumulative basis, FDI net inflows for the first ten months of 2017 grew year-on-year by 20.5 percent to US$7.9 billion. In particular, net equity capital investments increased by 54.7 percent to US$2.6 billion as gross equity capital placements of US$3.1 billion more than offset withdrawals of US$465 million. Gross equity capital placements came mostly from the Netherlands, the United States, Singapore, Japan and Hong Kong. By economic activity, equity capital investments were channeled mainly to electricity, gas, steam and air-conditioning supply, manufacturing; real estate; construction; and wholesale and retail trade activities. Non-residents’ net investments in debt instruments totaled US$4.6 billion during the period, 8.5 percent higher than the level recorded during the comparable period in 2016. Reinvestment of earnings amounted to US$662 million.

Source: Bangko Sentral ng Pilipinas (BSP)

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