Foreign Direct Investments Net Inflows Grow by 57 Percent in May 2017; Reach US$3 Billion in the First Five Months of 2017

Foreign direct investments (FDI) recorded net inflows of US$572 million in May 2017, higher by 57 percent than the US$364 million registered in the comparable period last year. 1,2 This was driven by continued positive outlook on the Philippine economy buoyed by strong macroeconomic fundamentals. All FDI components yielded net inflows during the period.

In particular, debt instruments (or lending by parent companies abroad to their local affiliates to fund existing operations and business expansion) posted net inflows of US$459 million, an increase of 108.3 percent from the US$220 million recorded in May 2016. Equity capital investments likewise registered net inflows of US$43 million as equity capital placements of US$83 million more than offset withdrawals of US$40 million. Equity capital placements during the month were sourced mainly from Hong Kong, the United States, Japan, Singapore, and Malaysia. These capital infusions were invested largely in real estate; financial and insurance; manufacturing; electricity, gas, steam and air conditioning supply; and wholesale and retail trade activities. Reinvestment of earnings amounted to US$71 million, 7.8 percent higher than the US$65 million recorded in May 2016.

As a result of these developments, FDI net inflows for the first five months of the year reached US$3 billion, albeit lower by 23.8 percent than the US$3.9 billion posted for the same period last year. Net inflows in equity capital investments declined by 85.4 percent to US$213 million during the period. Equity capital placements aggregating US$358 million came mostly from Japan, the United States, Hong Kong, Singapore, and Germany. These were channeled mainly to real estate; financial and insurance; manufacturing; wholesale and retail trade; and electricity, gas, steam and air conditioning supply activities. Net investments in debt instruments increased by 12.8 percent, amounting to US$2.4 billion from the US$2.2 billion registered in the same period last year. Meanwhile, reinvestment of earnings grew by 7.5 percent to US$345 million during the period.

Source: Bangko Sentral ng Pilipinas (BSP)