International investors showed optimism on the Philippine economy’s long-term prospects, as foreign direct investments (FDI) grew further in November 2017 to surpass the government’s full-year projection for 2017.
The Bangko Sentral ng Pilipinas (BSP) on Monday reported a 16.9-percent increase in the country’s FDI to reach $869 million last November.
FDI are the type of investments foreign players make to a country in search for a long-term yield. These investments are deemed more coveted than foreign portfolio investments, as these are usually tangible and job generating.
By specific component, the BSP said the rise in FDI during the month was due mainly to the 13.1-percent expansion in nonresidents’ net placements in debt instruments issued by local affiliates—or the so-called intercompany borrowings—to reach $604 million during the month.
Net equity capital inflows—albeit with a lower share to the total inflows—grew during the month by 38.7 percent to hit $210 million. The $210-million net inflow came about as only $18 million were withdrawn in equity capital during the month, leaving the total inflows at $228 million, more than enough to cover for the outflows.
The BSP said bulk of gross equity capital investments during the month came from Singapore, Hong Kong, Luxembourg, China and the United States.
Sectors that benefitted from these equity capital placements were manufacturing, real estate, electricity, gas, steam and air-conditioning supply, construction and wholesale and retail trade activities.
Reinvestment of earnings, meanwhile, amounted to $56 million during the month, completing the total $869-million FDI for November.
The BSP expressed optimism with the development, especially after the strong November FDI performance of the country pushed the total FDI inflows for the
first 11 months of the year above its earlier expectations for the entire 2017.
“The sustained FDI inflows reflected investor confidence given the Philippine economy’s solid macroeconomic fundamentals and growth prospects,” the BSP said.
FDI for January to November hit $8.7 billion, surpassing the $8-billion projection for 2017.
Net FDI rose by 20.1 percent year-on-year, which was attributed largely to the 9-percent growth in net placements in debt instruments to hit $5.2 billion.
Other FDI components also performed well during the period, with net investments in equity capital hitting $2.8 billion, from $1.8 billion in the comparable period in 2016.
The BSP said for the entire 11 months, the equity-capital infusions were sourced mainly from the Netherlands, the United States, Singapore, Japan and Hong Kong.
The placements were invested largely in gas, steam and air-conditioning supply; manufacturing; real estate; construction; and wholesale and retail trade activities.
Reinvestment of earnings, on the other hand, reached $717 million for January to November.