Foreign investments down 11.6% in 1st quarter

Lasting foreign investments in the Philippines rose in March as the country maintained its status as one of the most attractive destinations in the region.

The increase in foreign direct investments (FDIs) was in contrast to the earlier reported net outflow of “hot money” or short-term portfolio investments in the same month, the Bangko Sentral ng Pilipinas (BSP) said Tuesday.

Year-to-date, however, FDIs stood at $1.85 billion, down 11.6 percent from the first quarter of 2013.

“This was due to the continued lending of parent companies abroad to their local affiliates to fund existing operations and the expansion of their businesses in the country, an indication of sustained confidence in the country’s strong macroeconomic fundamentals,” the BSP said in a statement.

FDIs, which are money invested for the expansion of foreign firms’ operations or the purchase of new equipment in the Philippines, reached $476 million in March, up 78.5 percent from the same month last year.

These investments come in the form of equity investments by foreign firms, lending by multinationals to their local affiliates and subsidiaries, and the retention of earnings of multinationals in their local operations.

Equity capital investments posted a net inflow of $278 million during the month. This was on account of the 264.8-percent increase in gross equity capital placements to $405 million from $111 million in the previous year, which more than offset the withdrawals amounting to $126 million during the period.

Bulk of the equity capital investments—which came largely from the United States, Japan, Singapore, Hong Kong and Taiwan—were channeled to the financial, manufacturing, real estate, mining and quarrying, and wholesale and retail trade sectors, the BSP said.

Moreover, intracompany borrowings (net placements of parent companies abroad in debt instruments issued by local affiliates) reached $143 million in March 2014.

Meanwhile, reinvestment of earnings rose by 3.5 percent year-on-year to $54 million during the month as foreign investors chose to retain their earnings in local corporations on the back of favorable prospects for the Philippine economy. Paolo G. Montecillo

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