The Philippines' net inflows of foreign direct investments (FDI) were sustained in the first three quarters of the year on the back of the country’s strong fundamentals and better governance. FDI for January−September 2012 totaled US$1.1 billion, markedly higher by about 40 percent relative to its year-ago level of $782 million.
The improvement in FDI was mainly driven by net infusion of equity capital amounting to $1.2 billion. In particular, gross equity capital placements during the nine-month period aggregated $1.4 billion, almost thrice the year-ago level of $553 million.
The bulk of these investments originated mostly from the U.S., Australia, the Netherlands, British Virgin Islands, and Japan. The major sectors that benefited from the investments were the manufacturing, real estate, wholesale and retail, mining and quarrying, financial and insurance, and transportation and storage sectors.
Likewise, reinvested earnings amounted to $121 million. However, this was lower by 56.3 percent than the $277 million posted in the same period in 2011.
Meanwhile, the other capital account—consisting largely of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines—posted net outflows of $228 million, a turnaround from the $355 million net inflows registered last year. This was largely on account of local companies’ settlement of trade credits extended by their foreign affiliates.
For September 2012 alone, net FDI inflows reached $55 million, lower than the $138 million net inflows recorded in the same month in 2011. Net inflows during the month consisted mainly of equity capital which reached $57 million, compared to the $121 million recorded in September 2011.
Gross placements of equity capital amounting to $102 million—sourced largely from the British Virgin Islands, the U.S., Macau, and Singapore—were channeled to the wholesale and retail trade, real estate, transportation and storage, and manufacturing sectors.
Reinvested earnings also registered net inflows of $20 million but the other capital account posted net outflows of $22 million.