FOREIGN investors were eager to put their money in the Philippine economy in hopes for long-term economic gains at the start of 2018’s second half, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.
On Wednesday, the Central Bank reported a “significant rise” in the country’s foreign direct investments (FDI) inflows, from $344 million in July last year to an almost three-fold rise to $914 million this year.
FDI is the type of investment that is often more coveted, as it stays longer in the economy and creates job opportunities for locals. It is also not easily pulled out of the market unlike its shorter-term counterpart, the foreign portfolio investments.
“This reflected the continued positive investor sentiment on the Philippine economy on the back of strong macroeconomic fundamentals and growth prospects,” the BSP said in a statement on Wednesday.
More than 60 percent of FDI net inflows during the month was in the form of nonresidents’ investments in debt instruments issued by local affiliates—or the so-called “intercompany borrowings.” This subcomponent of the FDI grew to $584 million in July, from the $136 million in the same period last year.
Meanwhile, net equity capital investments also grew strongly by 90.2 percent to reach $261 million in July, from $137 million in the same month in 2017.
This was a result of the confluence of a 60.6-percent increase in equity capital placements to $278 million coupled with the decline in withdrawals by 52.3 percent to $17 million.
The BSP said these equity capital placements were sourced primarily from Singapore, Taiwan, the United States, Korea and Japan.
Investments were channeled largely to manufacturing, financial and insurance, real estate, wholesale and retail trade, and administrative and support-service activities.
Meanwhile, reinvestment of earnings amounted to $69 million during the month.
For the January-to-July period, FDI net inflows increased by 52.1 percent to $6.7 billion, from $4.4 billion last year.
Several private analysts had earlier projected a good year for FDI inflows into the country.
In particular, Moody’s Investors Service said while global investors’ need for portfolio rebalancing has led to increased market pressure in emerging markets like the Philippines, FDI will remain “relatively strong overall.”
Barclays research director Rahul Bajoria also said among the expected drivers of growth in the third quarter of the year is the foreseen pickup of FDI numbers, as well as higher remittance flows toward the end of the year.
Source: https://businessmirror.com.ph/fdi-inflows-in-july-rise-to-914-million/
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