Foreign direct investments (FDI) to the Philippines increased by 70 percent to $1.2 billion in August, bearing positive news for the country’s investment climate for the remainder of the year, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.
This is the highest monthly FDI flow to the country in 16 months, or since April last year, when it hit $2.2 billion. The BSP said the surge in FDI “reflected continued favorable investor sentiment on the Philippine economy on the back of the country’s strong macroeconomic fundamentals.”
The positive net inflow for the country’s FDI was seen across all components. In particular, net equity capital investments surged to $611 million, from $8 million a year ago.
According to the BSP, the bulk of these equity capital placements in August originated from the United States, Singapore, the Netherlands, Hong Kong and Japan, and were channeled mainly to manufacturing, real estate, wholesale and retail trade, transportation and storage, and electricity, gas, steam and air conditioning-supply activities.
Meanwhile, investments in debt instruments–or the so-called intercompany borrowings between foreign direct investors and their subsidiaries or affiliates in the Philippines–amounted to $533 million, lower by 15.7 percent than last year’s level.
Reinvestment of earnings was pegged at $59 million during the month.
The strong August FDI performance was able to narrow the difference between the level of FDI in the same eight-month period last year to this year. The Philippines, however, still has to play catch-up, as this year’s eight-month FDI inflows only totaled $5.1 billion, lower by 5.2 percent than the $5.4 billion recorded in the same period last year.
“The main reason for the decline in FDI [on a cumulative basis] was the lower equity capital placements and higher withdrawals during the period, decreasing net equity capital investments by 40.3 percent to $883 million from $1.5 billion,” the BSP said.