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NEWS UPDATES Asean Affairs                                 13  September 2011

Philippine FDI increases

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Foreign direct investment (FDI) inflows rose by more than a fourth in June on the back of the Philippines' sound macroeconomic fundamentals and improved investor risk appetite, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

In a statement, the BSP said it registered net FDI inflows of $64 million in June, up 28 percent from $50 million in the same month last year.

All components of the FDI posted positive balances during the month, mirroring favorable investor sentiment on account of the country's strong macroeconomic fundamentals, such as the improving fiscal situation, benign inflation and stable banking sector.

Reinvested earnings jumped 150 percent to reach $25 million in June from the $10 million in the same month last year. Similarly, the other capital account grew by almost twofold to reach $19 million, a turnaround from the $20 million outflow last year.

However, net equity capital infusion went down by 66.7 percent to $20 million from the $60 million in June last year.

This year's inflows have risen 16.4 percent to $779 million in the first six months from $669 million in the same period last year.

"The respectable growth in FDI reflected favorable investor sentiment as the country's macroeconomic fundamentals remained strong, amid a backdrop of a moderating and uneven global economic outlook," BSP Governor Amando Tetangco Jr. said.

Net inflows of equity capital rose by 82.1 percent to $193 million in the January to June period from $106 million in the comparable period last year.

Gross equity capital placements reached $244 million, with the bulk of investments coming from the United States, Japan, Hong Kong, Singapore and the Netherlands. The real estate, manufacturing, mining and quarrying, financial and insurance activities, utilities, and wholesale and retail trade sectors were the major beneficiaries of these equity capital placements, the BSP said.

Reinvested earnings yielded net inflows of $223 million, representing the return on foreign investors' placements in the Philippines.

The other capital account-consisting mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines-posted a net inflow of $363 million, up 9.7 percent over the $331 million last year.

The central bank attributed the increase to higher trade credits extended to local subsidiaries by their parent companies abroad.

FDI pertains to money invested by foreigners in the Philippines for establishing new businesses or expanding existing ones, and as such generates employment.

Tetangco had said capital would continue to flow into the Philippines and other emerging markets amid the uncertainty in advanced economies.


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This year in Thailand-what next?

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It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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