3rd Quarter 2010
Posted 18 November 2010
Foreign direct investments in the Balance of Payments (BOP)1
1. Total BOP FDI in US Dollars and Philippine Pesos 2
1.1 July to August 2010
FDI net inflows in the Balance of Payments (BOP) as compiled by the Bangko Sentral ng Pilipinas (BSP) for the months of July to August 2010 reached US$ 295.0 million, lower by 23.8 percent from previous year’s net inflow of US$ 387.0 million. All FDI components except reinvested earnings posted net inflows during the July to August period. Among the FDI components, other capital which consists mainly of inter company borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines recorded the highest net inflow of US$ 195.0 million expanding more than six times the US$ 30.0 million net inflow recorded last year.
During this period, net inflows of equity capital amounted to US$ 101.0 million with equity capital infusion coming mostly from the U.S.A. and Japan. The major recipients of these inflows were the real estate, mining, and information and communication sectors.
In peso terms, FDI in the BOP for July to August 2010 recorded a net inflow of PhP 13.6 billion from PhP 18.6 billion in 2009, a decline of 27.2 percent.
Figure 1 Balance of Payments FDI
July to August, 2009 and 2010
1.2. January to August 2009
As reported by the BSP, FDI for the first eight months of 2010 recorded a net inflow of US$ 1.0 billion, lower by 38.0 percent from last year’s US$ 1.7 billion. Reinvested earnings surged to US$221 million in January-August 2010 from US$18 million in the same period a year ago, as investors opted to retain part of their earnings in local enterprises/corporations on the back of improvements seen in economic and corporate fundamentals. Other capital account (consisting mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines) turned around from net outflows of US$163.0 million to net inflows of US$599 million. The increase in reinvested earnings and net capital was not enough to offset the reduction in net equity capital.
Most of the inflows were attributed to higher trade credits extended to Philippine-based subsidiaries/affiliates by their parent companies abroad.
In peso terms, FDI in the BOP for January to August 2010 recorded a net inflow of PhP 47.3 billion, down by 40.2 percent from PhP 79.0 billion in 2009.
Figure 2 Balance of Payments FDI
January to August, 2009 and 2010