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Foreign Direct Investments Post 55 Percent Increase in November 2013; January - November Level Up by 37 Percent

February 10, 2014

MANILA, Philippines, Feb. 10 -- The Central Bank of the Philippines issued the following news release:

Net foreign direct investment (FDI) inflows rose by 54.9 percent to US$286 million in November 2013, from US$185 million in the same period a year ago.1,2 FDI inflows remained robust on the back of sustained investor confidence in the growth prospects of the economy.

The significant rise in net FDI during the month was bolstered by non-residents' net placements in debt instruments issued by local affiliates, increasing by more than twofold to reach US$225 million during the period from US$108 million recorded in the previous year. Moreover, net equity capital inflows reached US$7 million, a reversal of the US$21 net equity capital outflow posted during the same period last year, as gross placements of US$94 million more than offset withdrawals of US$87 million in November 2013. Gross equity capital placements--sourced mostly from the United States, Japan, the United Kingdom, Hong Kong, and Singapore--were channeled mainly to manufacturing; electricity, gas, steam and air-conditioning supply; real estate; mining and quarrying; and wholesale and retail trade activities. Meanwhile, reinvestment of earnings aggregated US$55 million in November 2013.

On a cumulative basis, net FDI inflows for the first eleven months of 2013 likewise grew strongly, rising by 36.6 percent to reach US$3.6 billion from US$2.7 billion posted in the same period in 2012. In particular, non-residents' net placements in debt instruments increased by more than fivefold to US$2.3 billion, accounting for about two-thirds of FDI during the January-November 2013 period. This developed as parent companies abroad were encouraged by the sustained growth of the Philippine economy and thus continued to lend to their local subsidiaries/affiliates to fund existing operations and/or expansion of their businesses in the country. Moreover, gross placements of equity capital of US$2.4 billion more than offset withdrawals of US$1.7billion. This resulted in net inflows of equity capital of US$665 million during the period. The bulk of gross equity capital placements--which originated primarily from Mexico, Japan, the United States, British Virgin Islands, and Singapore--were channeled mainly to manufacturing; water supply, sewerage, waste management and remediation; financial and insurance; real estate; and arts, entertainment and recreation activities. Meanwhile, reinvestment of earnings reached US$641 million in January-November 2013.

1The BSP adopted the Balance of Payments, 6th edition (BPM6) compilation framework effective 22 March 2013 with the release of the full-year 2012 and revised 2011 BOP statistics. The major change in FDI compilation is the adoption of the asset and liability principle, where claims of non-resident direct investment enterprises from resident direct investors are now presented as reverse investment under net incurrence of liabilities/non-residents' investments in the Philippines (previously presented in the Balance of Payments Manual, 5th edition (BPM5) as negative entry under assets/residents' investments abroad). Conversely, claims of resident direct investment enterprises from foreign direct investors are now presented as reverse investment under net acquisition of financial assets/residents' investments abroad (previously presented as negative entry under liabilities/non-residents' investments in the Philippines).

2 BSP statistics on FDI covers actual investment inflows, which could be in the form of equity capital, reinvestment of earnings, and borrowings between affiliates. In contrast to investment data from other government sources, the BSP's FDI data include investments where ownership by the foreign enterprise is at least 10 percent. Meanwhile, FDI data of Investment Promotion Agencies (IPAs) do not make use of the 10 percent threshold and include borrowings from foreign sources that are non-affiliates of the domestic company. Furthermore, the BSP's FDI data are presented in net terms (i.e., equity capital placements less withdrawals), while the IPAs' FDI do not account for equity withdrawals.

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Source: Targeted News Service

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