By Melissa Luz T. Lopez, Senior Reporter
FOREIGN DIRECT INVESTMENT (FDI) net inflows to the Philippines more than doubled in May from a year ago to a seven-month high, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.
Such net inflows leaped to $1.645 billion that month from $1.027 billion in April and the $677.23 million in May 2017. This is the biggest since October 2017’s $1.918-billion haul, according to BSP data.
May saw the Philippine government reporting that the economy grew by 6.8%, which was revised to 6.6% last Wednesday. The central bank likewise announced that month its first interest rate hike — amounting to 25 basis points — in nearly four years.
The biggest inflows — accounting for 80% — consisted of foreign firms’ investment in debt instruments of their Philippine units that doubled to $1.329 billion from $564 million a year ago.
Equity placements totaled $257 million, triple the $83 million infused a year ago, which were partly offset by outbound capital worth $15 million that were 62.5% smaller than May 2017’s $40 million.
This resulted in a $241-million net equity capital infusion that was more than five times the year-ago $43 million.
Further providing signs of investor confidence was a 5.7% increase in reinvested earnings to $75 million from $71 million.
Investors from Singapore, the United Kingdom, Germany, the United States and Japan were the biggest sources of inflows in May. Capital went into sectors like manufacturing; real estate; electricity, gas, steam and air conditioning supply; financial and insurance; and professional, scientific and technical activities.
The May tally boosted year-to-date FDI net inflows to $4.847 billion, 49% more than the $3.254 billion which the country received in 2017’s first five months.
“This reflects continued investor confidence in the Philippine economy’s strong macroeconomic fundamentals and growth prospects,” the BSP said in a statement.
FDIs bring in additional capital for the Philippine economy, supporting business expansion and generating more jobs.
One analyst said foreigners remain bullish on the Philippines and expect it to be a rapidly growing economy despite uncertainties in both the domestic and global markets.
“[E]ven though growth was slower in Q2, it was steady and respectable, looking at the many moving parts of the demand and supply side of the economy. Demand was intact and supply had ample growth,” said Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines.
“With all these, foreign investors still see the Philippines’ economic growth story moving along steadily despite the structural weaknesses and inefficiencies observed recently such as supply side-driven inflation, weak agriculture production and output, uneven incentives schemes for future investments, and slow financial system development.”
The central bank expects full-year FDI net inflows to reach $9.2 billion this year, coming from 2017’s record $10.049 billion.