Foreign direct investments (FDI) net inflows reached US$754 million in September 2017, 61.8 percent higher than the US$466 million recorded in the same period last year.1, 2 Investment inflows surged, buoyed by investor confidence in the Philippine economy on the back of strong macroeconomic fundamentals and high growth prospects. Net equity capital investments during the month increased by 31.8 percent to US$182 million, as gross placements at US$194 million more than offset withdrawals of US$12 million. Foreign capital infusion during the month came mostly from the United States (US), Singapore, the Netherlands, China, and Japan. By economic activity, foreign equity capital placements were mainly invested in construction; professional, scientific and technical; manufacturing; real estate, and accommodation and food service activities. Likewise, investments in debt instruments issued by local affiliates, consisting of intercompany loans, grew by 75.2 percent to US$513 million from US$293 million in September 2016. Meanwhile, reinvestment of earnings expanded by 68 percent to US$59 million during the month.
On a year-to-date basis, FDI posted net inflows of US$5.8 billion, albeit lower by 0.2 percent than the US$5.9 billion registered during the comparable period last year. Net equity capital recorded lower inflows at US$1.1 billion from US$1.6 billion in January�September 2016. Equity capital investments during the period emanated largely from the US, Singapore, Japan, the Netherlands, and Hong Kong. Foreign capital placements were largely invested in manufacturing; real estate; wholesale and retail trade; financial and insurance; and construction activities. Net investments in debt instruments grew, however, by 13.1 percent to US$4.2 billion. Reinvestment of earnings for the first nine months of 2017 reached US$604 million, higher by 10.4 percent from last year's level.
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)