FDIs steady year to date as September flows surge
FOREIGN DIRECT INVESTMENTS (FDI) to the Philippines surged in September amid sustained optimism from offshore investors, with both intercompany lending and equity capital picking up from a year ago, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
Net FDI jumped 61.8% to $754 million that month from the $466-million inflow in September 2016, although it was 37.3% less than August’s $1.203-billion tally.
The central bank attributed the strong growth in investment flows to robust investor confidence in the Philippines in the face of “strong macroeconomic fundamentals” and “high growth prospects.”
Inflows in September, in turn, helped fuel rapid economic expansion in the third quarter that clocked 6.9%, beating market expectations amid increased investments that made up for softer consumer spending growth in the same period.
FDIs are a key source of capital for the local economy, generating more jobs for Filipinos as these flows fuel business expansion.
September also saw the Senate Committee on Ways and Means approving its version of the first of up to five planned tax reform packages, four months after a counterpart measure cleared the House of Representatives on May 31, bringing the priority measure closer to the January 2018 implementation targeted by the Department of Finance.
The same month saw the United States Congress also extend the government debt limit for three months and provide some $15 billion in much-needed hurricane-related aid.
Foreign investors continued to pour more funds into their local affiliates in September, with placements in the latters’ debt instruments nearly doubling to $513 million from $293 million a year ago.
Net equity placements went up a third to $182 million from $138 million year on year.
Gross equity inflows reached $194 million, partly offset by $12 million in capital withdrawn. That compared to $157 million gross inflows a year ago, against $19 million in outbound funds.
More companies also chose to reinvest earnings that month at $59 million, 68% more than the $35 million the year prior.
The United States, Singapore, the Netherlands, China and Japan were the biggest sources of foreign capital in September, with funds going to construction; professional, scientific and technical sector; manufacturing; real estate; as well as accommodation and food service, the BSP said.
September’s FDI tally pulled the nine-month haul to $5.839 billion, close to matching the $5.85 billion in investments received in the year-ago nine-month period. Bigger inflows over the past few months are placing the current figure on track to match 2016’s total investments.
Security Bank Corp. economist Angelo B. Taningco said the latest FDI tally reflects positive market sentiment towards the “medium- to long-term prospects” of the Philippine economy, fuelled by optimism over the tax reform and public infrastructure spending plans of the administration.
“I believe the BSP’s $8-billion target for the year is feasible, as I expect FDI net inflows to remain buoyant for the last three months of the year,” he said in an e-mail.
As of its June review, the central bank expected net FDI inflows to slightly surpass the $7.93 billion recorded in 2016 to hit a fresh record high. — Melissa Luz T. Lopez
