The Bangko Sentral ng Pilipinas (BSP) said foreign direct investments (FDI) for the first nine months of this year has reached US$5.9 billion.
The figure, BSP added, is 25.3 percent higher than the US$4.7 billion FDI in the same period in 2015.
The BSP based its report 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, the BSP said 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.
It also added that claims of resident direct investment enterprises from foreign direct investors are presented as reverse investment under net acquisition of financial assets/residents’ investments abroad.
The BSP attributed the continued FDI inflows on investors’ confidence in the country’s economy on account of sustained growth prospects and strong macroeconomic fundamentals.
“Investments in debt instruments (or lending by parent companies abroad to their local affiliates to fund existing operations and business expansion) contributed largely to FDI net inflows during the period, registering an increase of 40.8 percent to US$3.7 billion from US$2.6 billion last year,” the BSP said.
It added that the net equity capital placements increased by 9.3 percent to US$1.6 billion as gross placements of US$1.9 billion more than offset withdrawals of US$248 million.
“Gross equity capital placements came mostly from Japan, Singapore, the United States, Hong Kong, and Taiwan. Said placements were largely invested in financial and insurance; manufacturing; real estate; accommodation and food service; and wholesale and retail trade activities. Meanwhile, reinvestment of earnings totaled US$548 million during the nine-month period.”
The BSP also reported that on a monthly basis, net FDI inflows amounted to US$469 million in September 2016, albeit lower by 69.3 percent than the year-ago level of US$1.5 billion.
It also took note of investments in debt instruments that recorded lower net inflows of US$296 million, representing a year-on-year decline of 66.3 percent and that equity capital posted net inflows of US$138 million, lower than the US$600 million registered last year.
“Equity capital placements were sourced mainly from Japan, Taiwan, Germany, the Netherlands, and the United States. By economic activity, equity capital infusions were mainly channeled to manufacturing; real estate; wholesale and retail trade; financial and insurance; and administrative and support service activities. Reinvestment of earnings amounted to US$35 million during the month,”
BSP also emphasized that 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.”
