THE PHILIPPINES could see bigger investment flows over the coming months as the government’s infrastructure push may attract more players to bet on local prospects, a central bank official said.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said robust domestic economic activity, boosted further by the government’s “Build, Build, Build” initiative, places the Philippines on the radar of foreign investors looking for growth opportunities.
The upbeat momentum will likewise offset the impact of outbound flows due to rising yields in advanced economies.
“[T]he expected normalization of monetary policy both in the US and Europe that could temper capital flows to emerging markets including the Philippines,” Mr. Guinigundo said in a recent ambush interview.
“But I think the continued strength of the Philippine economy — particularly output and the government’s program towards infrastructure — would attract not only foreign direct investments but also portfolio investments to ride the tide, I think it can also provide the support for higher portfolio investments.”
Foreign portfolio investments, which are dubbed “hot money” given the ease by which these funds enter and leave the Philippines, posted a $1.132-billion net inflow in March to log a three-year high. The inflows reversed February’s $545.14-million net outflow and the $459.86-million outflows in March 2017, BSP data showed.
Foreign players betted as much as $2.469 billion last month on the back of fund-raising initiatives by corporates as well as by the Philippine government’s maiden issuance of renminbi-denominated bonds to global investors.
March investments brought the three-month tally to a $749.43 million in net retained capital, reversing the $567.53 million which were plucked out from the Philippines during the same period in 2017.
The central bank expects $900 million in net outflows this year, wider than the $205.03 million in withdrawn capital in 2017.
Economic managers of the Duterte administration kept their 7-8% annual growth forecast for the Philippine economy this year until 2022, supported by stronger revenue collections and increased public spending.
In particular, the government is eyeing to spend P1.068 trillion on public infrastructure this year, in keeping with President Rodrigo R. Duterte’s P8-trillion Build, Build, Build program. — Melissa Luz T. Lopez

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