FDIs net inflows reach US$ 732M in first half

September 15, 2010 10:40 am 

MANILA, Sept. 14 – Foreign-owned companies already generating profits in the Philippines not only plowed back their earnings but borrowed even more from their parent firms overseas in the first six months of the year, latest data from the Bangko Sentral ng Pilipinas show.

So-called reinvested earnings during the period, representing profits that could have been repatriated but were allowed to remain instead, expanded by a factor of more than 31 times to US$ 222 million as at end-June this year.

This compared with reinvested earnings of only US$ 7 million for the same period last year.

“This reflected the boost in corporate earnings in the first semester of 2010 that encouraged investors to retain earnings/profits in local firms,” BSP governor Amando M. Tetangco Jr. said on Tuesday.

For the same period in 2008 when the global financial crisis was in full swing, reinvested earnings totaled only US$ 38 million.

The other capital account, mainly loans obtained by the foreign-owned subsidiaries or affiliates in the Philippines from their overseas parents, reverted to net inflows totaling US$ 404 million.

This represented a turnaround from net outflows for the same period last year, indicating profit-taking on the part of foreign investors who opted to repatriate their profits to their overseas principals.

Net other capital in 2008 amounted to US$ 406 million, according to BSP data.

There were far more equity placements than withdrawals also during the period, totaling US$ 294 million and US$ 188 million, respectively.

Consequently, net equity placements amounted to net inflows of US$ 106 million in the first six months, which was 92.7 percent lower than year ago net inflows of US$ 1.456 billion.

In 2008, net equity capital flowing inward totaled US$ 398 million.

As a result, foreign direct investments from January to June represented net inflows of US$ 732 million or 42 percent lower than year ago inflows of US$ 1.27 billion, Tetangco said.

He attributed their continued attraction to the Philippines as investment haven to its “sound macroeconomic fundamentals and the optimism on the reform agenda of the new administration.”(PNA) VSV/utb

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