$61-M foreign investments leave PH in June

MANILA, Philippines - For the first time since December 2011, the country experienced a net outflow of foreign direct investments (FDI) in June as funds return to the United States, which is showing signs of economic recovery.

According to Bangko Sentral ng Pilipinas (BSP) data released on Tuesday, September 10, the Philippines suffered a net FDI outflow of US$61 million in June, a reversal of the $307 million net inflow recorded in June 2012, and the $53 million net inflow last May.

This comes as the US Federal Reserve is set to announce how it will proceed with its stimulus program, which involves huge bond purchases that have helped kept their economy afloat during the worst of their economic crisis. The Fed may announce a quantitative easing in anticipation of further improvements in the economy, which in turn provides signals to global investors who invested in emerging markets like the Philippines that the US is a safe place to be again.

In the same month, portfolio investments, or hot money, also registered a net outflow.

Of the $193 million net FDI outflow in June, withdrawals of equity capital were mostly from the United States.

Others were from South Korea, Japan, United Kingdom and Hong Kong that were channeled mainly to manufacturing, real estate, construction, wholesale and retail trade, and arts, entertainment and recreation sectors, the BSP said.

Reinvested earnings amounted to a net inflow of $59 million, and placements in debt instruments issued by local firms recorded a net inflow of $72 million.

Net inflow in Jan-June

This brought the January-to-June FDI flows to $2.188 billion — still in the positive territory.

The net inflow for the first 6 months of 2013 reflected a 11% increase over the $1.973 billion recorded a year ago.

“This reflected the favorable sentiment of investors on the Philippine economy on the back of strong macroeconomic fundamentals,” the BSP said.

Net inflows of equity capital reached $638 million, while net inflows of reinvested earnings hit $386 million. Net inflows from placements in debt instruments reached $1.165 billion.

FDI in the first 6 months came mostly from investors from Mexico, Japan, the United States, and the British Virgin Islands, the BSP said.

The investments were made mostly in the utilities, financial services, entertainment and real estate sectors, it added.

The BSP's net FDI inflows target is $2.2 billion this 2013. - Rappler.com