FDI ups 11% in 1st half of 2013

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Wednesday, September 11, 2013


NET foreign direct investment (FDI) inflows increased by 10.9 percent to reach US$2.2 billion in January to June this year compared to the level posted in the same period last year.

This reflected the favorable sentiment of investors on the Philippine economy on the back of strong macroeconomic fundamentals.

By FDI component, gross equity capital placements rose by 58.7 percent to reach US$2 billion in the first six months of 2013 from US$1.2 billion in the same period in 2012.

The bulk of equity capital investments -- which came mainly from Mexico, Japan, the United States, and the British Virgin Islands -- were directed to manufacturing activities; water supply, sewerage, waste management and remediation; financial and insurance activities; arts, entertainment and recreation activities; and real estate activities.

Meanwhile, non-residents’ net placements in debt instruments issued by local affiliates (or intercompany borrowings between foreign direct investors and their subsidiaries/affiliates in the Philippines) in the form of loans and debt securities rose to US$1.2 billion in January to June this year, close to fourfold the US$295 million recorded in the same period last year.

Parent companies abroad continued to lend funds to their local subsidiaries/affiliates to sustain existing operations or expand their businesses in the country.

Reinvestment of earnings amounted to US$386 million in January to June this year as foreign investors opted to retain their earnings locally on expectations of sustained strong Philippine economic performance.

In June 2013, FDI recorded net outflows of US$61 million. This was a reversal of the US$307 million net inflows posted in the same month last year.

In particular, equity capital yielded net outflows of US$193 million as withdrawals of US$283 million more than offset gross placements of US$91 million.

Gross equity capital placements—sourced mostly from the United States, South Korea, Japan, United Kingdom and Hong Kong—were channeled mainly to manufacturing; real estate; construction; wholesale and retail trade; and arts, entertainment, and recreation sectors.

Non-residents’ placements in debt instruments issued by local affiliates registered net inflows of US$72 million during the month from US$106 million last year.

Reinvestment of earnings amounted to US$59 million, also lower by 34.8 percent than the year-ago level of US$123 million. (PR)

Published in the Sun.Star Cagayan de Oro newspaper on September 12, 2013.

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