By Melissa Luz T. Lopez
Senior Reporter

FOREIGN DIRECT INVESTMENTS (FDI) to the Philippines surged anew in November amid strong interest in debt instruments and equities, taking year-to-date inflows beyond the $8 billion expected by the Bangko Sentral ng Pilipinas (BSP).

Net FDIs reached $869 million that month, surging 16.9% from the $744 million recorded in November 2016. November inflows, however, were less than half October’s $2.017 billion, according to latest central bank data.

FDIs are a key source of capital for the local economy, creating more jobs for Filipinos as these funds fuel business expansion.

The strong investment flows brought the 11-month tally to $8.725 billion, a fifth more than the $7.264 billion recorded in 2016’s counterpart period and past BSP’s $8-billion full-year forecast.

“The sustained FDI inflows reflected investor confidence given the Philippine economy’s solid macroeconomic fundamentals and growth prospects,” the BSP said in a statement on Monday.

Foreign investors preferred placing their bets primarily in debt instruments of their Philippine affiliates for their operation or expansion. These inflows grew by 13.1% year-on-year to $604 million in November, accounting for roughly 70% of net FDIs that month.

November also saw equity other than reinvested earnings jump 38.7% to reach $210 million, as $228 million in gross placements eclipsed just $18 million that headed for the exit. Both gross placements and withdrawals, however, saw year-on-year reductions of 47.6% from $434 million and 93.8% from $283 million, respectively.

Companies based in Singapore, Hong Kong, Luxembourg, China and the United States were the biggest sources of capital during the month. A chunk of equity investments went to the sectors of manufacturing; real estate; electricity, gas, steam and air-conditioning supply; construction; as well as wholesale and retail trade activities, the central bank said.

November also saw reinvested earnings dip 4.3% to $56 million from $58 million the prior year.

Two analysts said the Philippines’ robust growth story whetted investor appetite during the period.

“Positive economic growth prospects may have prompted foreign investors to increase their FDI stock in the country as exemplified by the large tally for November,” said Angelo B. Taningco, economist at Security Bank Corp.

The Philippine Statistics Authority announced on Nov. 16 that the economy grew by 6.9% in the third quarter, beating market expectations. This was later on revised upward to seven percent, while full-year growth for 2017 clocked in at 6.7%, well within the government’s 6.5-7.5% target.

“It is possible that strong FDI inflows were sustained in December on the back of foreign investors’ optimism towards the country’s full-year economic performance,” Mr. Taningco added.

Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, pointed out that progress in the government’s economic reform agenda may have also spurred investor sentiment.

“[T]here has been a significant increase in the country’s net FDI for November 2017 and for the whole of last year as a result of improved investor optimism amid the Duterte administration’s key initiatives — Build, Build, Build Program and TRAIN law — which are expected to support the country’s growth in the next few years,” Mr. Dumalagan said.

November saw the Senate approve of the first of up to five planned tax reform packages that was eventually signed into law last Dec. 19 as Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act (TRAIN). The law, which took effect last month, reduces personal income tax rates for those earning P2 million or lower in a year, to be offset by higher taxes on select goods and services.

TRAIN revenues — which are expected to reach P82.3 billion this year — will help fund priority infrastructure projects of the current administration. The entire four to five packages are supposed to contribute about a fourth of the P8 trillion the government needs for its infrastructure drive until 2022, when President Rodrigo R. Duterte ends his six-year term.

Currency fluctuations may have also helped convince investors to pour more funds into the country, with the peso trading at an average of P51.0384 versus the dollar in November last year. Mr. Dumalagan said that the FDI tally might have slipped in December as the peso recovered to the P50 level against the greenback.

THE HEAD of the Bureau of Customs (BoC) will relieve officers of districts that fail to hit revenue targets this month, the BoC said in a statement on Monday.

The move is in line with a Feb. 6 memorandum that says district collectors, deputy collectors for assessment, examiners, appraisers “and all personnel in charge of assessment” of districts that fail to meet targets will be relieved.

“I cannot put at stake another month for another experiment,” the bureau said in a separate press statement sent earlier on Monday, quoting its head, Commissioner Isidro S. Lapeña.

“Since I have just assigned some new collectors this January, we will base the relief on their February collection performance,” he explained, saying that such changes will take place in March.

The bureau cited preliminary data showing it collected P40.798 billion in January against a P46.394-billion target.

The bureau has been entrusted with a P598-billion collection target this year, compared to the P444.1 billion it collected in 2017 that fell short of a P459.6-billion goal.

Mr. Lapeña began cleansing the bureau almost as soon as he took over the bureau on Aug. 30 least year, yanking eight district collectors from their posts and reassigning 30 section chiefs in Manila to the provinces.

The bureau said in a Jan. 10 statement that there were “641 personnel movements” since September “in its campaign against corruption.”

Mr. Lapeña also ordered a halt to the practice of Customs collectors and traders of agreeing on the value of the latters’ shipments in lieu of correct valuation of goods.

He has also been bringing in officials from the Philippine Drug Enforcement Agency, which he used to head, and other government offices to occupy strategic, sensitive posts like those for intelligence and investigation, import assessment, management information systems and traders’ accreditation, among others.

Mr. Lapeña in late-December formed the Interim Internal Affairs and Integrity Unit to investigate public complaints against Customs personnel; conduct motu propio investigation of incidents where evidence in the prosecution of smuggling cases was compromised, tampered with, obliterated, or lost while in the custody of Customs personnel; conduct lifestyle checks on personnel of the bureau; as well as recommend the filing of criminal cases against erring personnel.

AUTOMOBILE SALES grew at a markedly slower pace in January — the month higher tax rates took effect — as less passenger cars were sold compared to a year ago, according to data released on Monday by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and by the Truck Manufacturers Association (TMA).

The joint CAMPI-TMA report showed automobile sales — covering passenger cars and commercial vehicles — increased by just four percent to 31,645 units from 30,425 in January 2017.

January 2018 sales were also a third less than December 2017’s 45,494 units.

“We started the year with a modest growth of four percent in January 2018 against the same period last year,” Rommel R. Gutierrez, CAMPI president and Toyota Motor Philippines first vice-president, said in a statement.

“While this is considerably low compared to the growth rate of January 2017 (27% up versus January 2016), we still consider January 2018 sales as satisfactory and a good start for the auto industry.”

Last month saw Republic Act No. 10963 — or the Tax Reform for Acceleration and Inclusion Act that increased taxes on automobiles, fuel, minerals, various investment products, and a host of other items, besides imposing new levies on sugar-sweetened drinks and others — take effect.

Passenger car sales dropped by 10.9% to 9,790 in January — accounting for 30.94% of total sales that month — from 10,984 in the same month last year, and by 31% from December’s 14,182.

In contrast, commercial vehicle sales partly made up from the drop in passenger car deliveries, increasing by 12.4% to 21,855 last month — making up 69.06% of the total — from 19,441 units a year ago. Compared to December’s 31,312 units, however, January sales were down 30.2%.

Under the commercial vehicle category, sales of:

• Asian utility vehicles — which made up 26.59% of commercial vehicle sales in January — slipped by 3.6% to 5,811 units last month from 6,026 in January last year and by 10.2% from December 2017’s 6,472;

• light commercial vehicles — which accounted for 69.63% — increased by 23.3% to 15,218 units from 12,340 in January last year, although they were down by 35.1% from December 2017’s 23,434.

Toyota topped other car firms last month, accounting for 41.77% of total sales with 13,217 vehicles sold, though this total was 9.1% less than the year-ago 14,542 and 23.6% less than the 17,307 units it sold in December.

Mitsubishi Motors Philippines Corp. ranked second with 6,757 units sold that contributed 21.35% to the total last month, a 36.7% increase from the year-ago 4,942 vehicles but still 1.9% lower than December’s 6,886 vehicles sold.

Ford Motor Company Philippines, Inc. was third with an 8.65% share of 2,737, 8.7% more than the 2,519 vehicles sold in January last year but still dropping 40.9% from December 2017’s 4,629.

CAMPI and TMA sold 425,673 vehicles last year, 18.4% more than the 359,572 units they sold in 2016. Last year’s increase was slower than the 24.6% expansion clocked for the entire 2016, as well as the 22.9% and 29.5% increases logged in 2015 and 2014, respectively.

Automobile deliveries in December alone increased by 33.4% year-on-year to 45,494 units.