June’s FDI surge fails to lift 1st half flows

NET foreign direct investment (FDI) flows to the Philippines nearly tripled in June as firms abroad reinvested earnings and lent more to their units here, but still failed to lift last semester’s tally, according to data the Bangko Sentral ng Pilipinas (BSP) released yesterday.

Net FDI inflows surged to $674 million that month from the downward-revised $568 million recorded in May and from the $238 million that entered the country in June last year.

In a statement, BSP said the strong FDI figures demonstrated investors’ “continued bullish outlook on the Philippine economy.” FDIs are a key source of capital for the local economy that generate more jobs for Filipinos as these fuel business expansion.

June saw investors reacting positively to the approval at the end of May of the first tranche of the government’s tax reform package at the House of Representatives, bringing the proposal closer to the 2018 implementation targeted by the Department of Finance.

Foreign investors poured $674 million into debt instruments of their subsidiaries and affiliates in June, nearly four times the year-ago $182 million. Reinvested earnings grew 16.5% to $72 million from $62 million.

On the other hand, equity capital flows resulted in $72-million net withdrawals that were much bigger than the year-ago $5-million outflows, as a threefold growth in gross placements to $113 million from $36 million was outpaced by total withdrawals’ nearly fivefold spike to $185 million from $41 million.