Bangko Sentral: FDIs fell 36.5 percent in Jan.-Oct.

Foreign direct investments (FDIs) in the Philippines dropped 36.5 percent to $1.07 billion in January-October last year from $1.686 billion in the same 2009 period, the central bank said Wednesday. Negative sentiments of foreign investors overran the surprising economic growth the Philippines experienced last year, Bangko Sentral ng Pilipinas (BSP) Gov. Amando Tetangco Jr. said in a statement. "Notwithstanding the favorable growth prospects in the domestic economy, investors remained cautious amid concerns on the sustainability of recovery of advanced economies, particularly the US," Tetangco said. He said the economic growth prospects in the US have remained fragile due in part to its swelling fiscal deficit and moderate employment growth. The BSP said equity capital dipped 88.7 percent to $203 million in January-October from $1.796 billion in the same 2009 period. According to the central bank, foreigners placed money in the real estate, financial, mining, services, and manufacturing sectors, with equity capital from the US, Japan, Ireland, Hong Kong, Singapore, Netherlands, and Switzerland. Earnings retained in local firms Reinvested earnings rose 488 percent to $259 million from $44 million, central bank data showed. Foreign investors opted to retain their earnings in local firms, given the country's sound macroeconomic fundamentals, Tetangco said. Other capital posted net inflows of $608 million, a turnaround from $154 million in net outflows in the first 10 months of 2009. "It was boosted by inter-company loan availments from affiliates abroad," Tetangco said. In October alone, $23 million in FDIs was taken out of the country from $83 million that was brought in in October 2009. Equity placements plunged 54 percent to $21 million during the month from $46 million in the same comparable period. Reinvested earnings also fell 47.8 percent to $12 million from $23 million. But other capital rose 152 percent to $53 million from $21 million. The central bank expected FDIs to register a net inflow of $2 billion last year, from $1.95 billion in 2009 and $1.54 billion in 2008, because of the resilient economy. — JE/VS, GMANews.TV