Foreign direct investments (FDI) net inflows amounted to US$869 million in November 2017, higher by 16.9 percent than the level posted a year ago.1,2 This was due mainly to the 13.1 percent expansion in non-residents' net placements in debt instruments issued by local affiliates (intercompany borrowings) to reach US$604 million. Net equity capital inflows likewise grew by 38.7 percent to US$210 million, as equity capital placements of US$228 million more than offset the US$18 million withdrawals. The bulk of gross equity capital investments came from Singapore, Hong Kong, Luxembourg, China, and the United States. These were channeled mainly to manufacturing; real estate; electricity, gas, steam and air-conditioning supply; construction; and wholesale and retail trade activities. Meanwhile, reinvestment of earnings amounted to US$56 million during the month.

As a result of these developments, FDI recorded net inflows of US$8.7 billion during the period January´┐ŻNovember 2017, exceeding the US$8 billion projection for 2017. The sustained FDI inflows reflected investor confidence given the Philippine economy's solid macroeconomic fundamentals and growth prospects. Net FDI rose by 20.1 percent year-on-year, driven largely by the 9 percent growth in net placements in debt instruments to US$5.2 billion. Net investments in equity capital reached US$2.8 billion from US$1.8 billion in the comparable period in 2016, on account of the combined effect

of higher equity capital placements (US$3.3 billion from US$2.4 billion) and lower withdrawals (US$483 million from US$555 million). Equity capital infusions during the period were sourced mainly from the Netherlands, the United States, Singapore, Japan, and Hong Kong. The said placements were invested largely in gas, steam and air-conditioning supply; manufacturing; real estate; construction; and wholesale and retail trade activities. Reinvestment of earnings reached US$717 million.

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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.

Source: Bangko Sentral ng Pilipinas (BSP)