Alexander P.

Aguirre March 13, 2018

2M2

Foreign investments hit record $10B

By: Daxim L. Lucas- Reporter / @daxinq

Philippine Daily Inquirer / 05:07 AM March 13, 2018

Foreign businessmen brought in a record amount of investments into the country in the
first full year of the Duterte administration owing to the Philippines’ strong economy, the
Bangko Sentral ng Pilipinas said on Monday.

In a statement, BSP Governor Nestor Espenilla Jr. said foreign direct investment inflows
reached a record high of $10 billion in 2017, up by 21.4 percent from the year-ago level.

“Investors continue to view the country as a favorable investment destination on the back
of the country’s sound macroeconomic fundamentals and growth prospects,” he said.

The central bank said these equity capital placements—as opposed to short-term
portfolio investments or the so-called “hot money”—originated largely from the
Netherlands, Singapore, the United States, Japan and Hong Kong.
By economic activity, equity capital placements were channeled mainly to gas, steam
and air-conditioning supply; manufacturing; real estate; construction, and wholesale and
retail trade activities.

All major foreign direct investment components registered increases during the year. In
particular, net equity capital investments expanded by 25.9 percent to $3.3 billion, with
gross placements of $3.7 billion exceeding withdrawals of $479 million.
Net availment of debt instruments (consisting mainly of intercompany
borrowings/lending between foreign direct investors and their subsidiaries/affiliates in
the Philippines) rose by 20.7 percent year-on-year to $6 billion.
Reinvestment of earnings increased by 9.3 percent to reach $776 million during the
year.

In December 2017, foreign direct investments registered $699 million in net inflows.
This was lower, however, by 9 percent from the level recorded a year ago due largely to
the 19.1-percent drop in net investments in debt instruments to $335 million. Net
placements of equity capital likewise declined moderately by 0.4 percent to $305 million.
On a gross basis, equity capital infusions reached $328 million, originating mainly from
Singapore, Japan, the Netherlands, the United States and Luxembourg.
These placements were invested largely in manufacturing; real estate; wholesale and
retail trade; information and communication, and arts, entertainment and recreation
activities. Meanwhile, reinvestment of earnings grew by 24.1 percent to $59 million in
December 2017.

The net inflows of foreign direct investments to the country in 2017 stand in contrast
with the net outflows of portfolio funds for the same period that amounted to $205
million—a phenomenon that has continued during the first two months of 2018.
The central bank defines foreign direct investments as actual inflows from overseas,
which could be in the form of equity capital, reinvestment of earnings or borrowings
between affiliates.

SOURCE: http://business.inquirer.net/247559/foreign-investments-hit-record-10b (March

13, 2018)

GIST

Main Points
1. The Philippines is becoming a favorable destination for different foreign
investors.
2. In a span of 1 year, all major foreign direct investment components registered
increased.

Relationship

With the increase of foreign investments, our country gains more opportunities and may
receive more income. Increase in different sectors in our economy increases our GDP which
reflects on the standard of well-being of the people in the country.