MANILA, Philippines – Foreign direct investments (FDI) soared by more than 127 percent in February, but this was not enough to put the figure for the first two months on growth territory, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
FDI registered a net inflow of $436 million in February, a sharp 127.1-percent increase from $192 million a year ago, preliminary data showed. A net inflow indicates more investments entered the country than left.
This brought foreign investments from January to February to $1.012 billion, still 18.7 percent lower than last year’s $1.245 billion. The BSP has a $2.2-billion FDI forecast for the year.
No explanation was given for the decline.
The Philippines is looking at boosting FDI to create more jobs, especially after bagging two investment grade status from Fitch Ratings last March and Standard & Poor’s Ratings Services this month.
“The sustained inflows of FDI reflect investors’ increasing optimism over the country’s growth potential notwithstanding the uncertainties on the strength of the global economy,” the central bank said in a statement.
“These developments are also an indication of improved investment climate in the country on the back of sound macroeconomic fundamentals,” it added.
Broken down, equity placements and reinvested earnings pulled down the two-month tally as they dropped by double-digit levels. Placements on debt instruments, nonetheless, continued to grow.
Equity investments, which are infusions of foreign companies to their offices here, grew nearly thrice to $215 million in February. Such, however, was not enough to lift year-to-date data, which slumped 55.8 percent to $377 million.
According to the BSP, Japan, the United States and Hong Kong continue to be the main sources of investments. Equity inflows were channeled primarily to water supply, sewerage, waste management and remediation activities.
Meanwhile, reinvested earnings painted a gloomier picture, BSP figures showed. In February, this segment decreased 29.4 percent to $60 million from last year’s $85 million. For the two-month period, it dipped by a slower 19 percent to $145 million.
Still, the BSP said foreign investors “opted to retain their earnings locally on account of favorable domestic economic prospects amid low and stable inflation.”
Lastly, bucking the trend were investments in debt instruments, which rose more than five times to $161 million in February and more than double to $490 million for the first two months.
“Parent companies abroad continue to lend funds to their local subsidiaries/affiliates to sustain existing operations or expand their businesses in the country,” the central bank said.
Source: Prinz P. Magtulis, The Philippine Star. 11 May 2013.
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