Foreign direct investments up 10% as confidence in PHL rises 

(Updated 3:33 p.m.) Buoyed by improved sentiment toward the Philippine economy, foreign investors plowed 10 percent more money into the Philippines last year, the Bangko Sentral ng Pilipinas said Monday.

 

In a statement, the Bangko Sentral said foreign direct investments increased by 9.8 percent to $2.03 billion in 2012 from $1.85 billion in 2011. 

 

“The country continued to benefit from strong foreign investors' confidence in the resilience of the domestic economy, given strong economic growth amid low and stable inflation, as well as strong external payments dynamics,” the Bangko Sentral said. 

 

Net capital equity payments—which accounted for the lion's share of FDI—more than doubled to a $1.3 billion inflow last year from $558 million in 2011. 

 

However, the latest FDI figure is “nothing to be excited about.” Metropolitan Bank & Trust Co. research head Ildemarc Bautista told GMA News Online.

 

“On a relative basis, yes the inflow was driven by the economy's resilience. But it's really still small compared to our Southeast Asian neighbors,” he said. 

 

The analyst noted that government reforms should not lose steam in order to attract more direct investments. “The government is doing the right things—focusing on infrastructure spending and improving the investment space,” Bautista said. 

 

“But the other thing is to improve on our power sector by making costs competitive for manufacturing investments,” he noted. 

 

Equity capital placements in Philippine-based businesses largely came from the United States, Australia, the Netherlands, Japan and the British Virgin Islands, mostly in the manufacturing, real estate, wholesale and retail trade, and financial sectors, according to Bangko Sentral data.

 

Reinvested earnings also rose by 7.9 percent to $1.1 billion as “foreign investors opted to retain a portion of their corporate earnings with their local enterprises,” the Bangko Sentral said. 

 

But other capital—largely composed of lending between foreign firms and their local arms—reversed to a net outflow of $373 million in 2012 from a $311 million inflow previously.  

 

Philippine-based subsidiaries paid existing debts owed to mother companies abroad as well as the extension of loans to their affiliates overseas, the Bangko Sentral said.

 

In December alone, FDI posted a $20 million inflow, a sharp turnaround from the $28 million net outflow a year earlier. — VS, GMA News