Long-horizon foreign funds expand 53% over two months

The Philippines remains a positive spot for long-term investments, and foreign players in February continue to pour capital into the country for potential gain, based on data from the Bangko Sentral ng Pilipinas (BSP).

The BSP on Thursday reported a 46.4-percent rise in the country’s foreign direct investments (FDI) to $573 million during the month.

Most of the inflows were long-term investments made by foreign players in the form of so-called intercompany borrowings.

Intercompany borrowings, essentially debt extended by foreign principals to their Philippine affiliates, grew 56.3 percent in February alone and accounted for $412 million of the $573 million extended during the period.

The remaining $161 million worth of FDI in February represented the aggregate of reinvestment of earnings and equity capital placements. In particular, net equity capital contributed $96 million to the pool, rising by 55.4 percent, from the previous year’s level.

The BSP said the capital placements were traced to investors from Hong Kong, the United States, China, the Netherlands and Japan, and were invested mainly in the arts, entertainment and recreation; real estate; manufacturing; construction; and electricity, gas, steam and air-conditioning supply activities.

Meanwhile, reinvestment of earnings amounted to $65 million during the month.

In the first two months this year, FDI net inflows rose by 52.6 percent to $1.5 billion.

The BSP said the sustained direct investment inflows in the first two months mirrors investor confidence in the country’s macroeconomic fundamentals and its growth prospects. In particular, net investments in debt instruments reached $793 million, representing a 10-percent growth from the level recorded in the same period last year.

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Bianca Cuaresma graduated cum laude from the University of Santo Tomas (UST) with a degree in AB Journalism. She was with the BusinessMirror during her internship in 2012 where she was assigned at the Department of Foreign Affairs (DFA) beat. She continued to be of service to the paper after she graduated in 2013. In 2014, she was awarded as the Reporter of the Year by the paper for her coverage in the Bangko Sentral ng Pilipinas (BSP). She is a BusinessMirror reporter for 3 years now, and has covered general assignments and agencies related to banking and finance in the country.