Foreign direct investment (FDI) net inflows in the first quarter rose to $2.2 billion or an increase of 43.5 percent compared to the same period last year, indicating the sustained strong investor confidence in the economic strategy of the Duterte administration, the Department of Finance (DOF) said.
Citing data from the Bangko Sentral ng Pilipinas (BSP), Assistant Secretary Paola Alvarez said that in March alone, FDI net inflows reached $682 million, or an increase of 27 percent from $537 million recorded in the same period in 2017.
“These are actual investments that flowed into our economy that helped create jobs and fueled growth. We should be more concerned with FDIs that are delivering economic benefits to the people, rather than pledges,” Alvarez said.
Alvarez said the increase in FDI inflows “is testament to the strong vote of confidence by investors in the economic strategy of the Duterte administration, which is anchored on an aggressive spending program on infrastructure and human capital development to achieve inclusive growth.”
In 2017, foreign businessmen also brought a record amount of investments into the country. FDI inflows reached a record high of $10 billion, up by 21.5 percent from the previous year.
Finance Secretary Carlos Dominguez III has said that this high volume of FDI inflows indicate a “broader and sustained increase of investment inflows into our economy.”
According to the BSP, net equity capital in the first quarter increased more than sixfold to $887 million from a year ago as gross placements of $996 million more than compensated for the withdrawals of US$109 million.
The bulk of the equity capital placements were invested in manufacturing; financial and insurance; real estate; arts, entertainment and recreation; and electricity, gas, steam and air-conditioning supply activities, the BSP said.
Net investments in debt instruments reached $1.1 billion, a decrease of 8.2 percent from $1.2 billion in the previous year, while reinvestment of earnings was steady at $193 million.
Equity capital placements in the first quarter originated mostly from Singapore, Hong Kong, China, Japan, and Taiwan.
The BSP said the 43.5 percent increase in FDI net inflows in the first quarter “reflected investors’ continued positive outlook on the Philippine economy on the back of sound macroeconomic fundamentals and robust growth prospects.”
According to the BSP, FDI inflows rose in March as net equity capital increased markedly on the back of higher gross placements of equity capital ($351 million from $51 million) and lower withdrawals ($33 million from $42 million).
The BSP said FDIs were invested mostly in manufacturing; real estate; art, entertainment and recreation; and financial and insurance activities.
Equity capital infusions came mostly from Singapore, Hong Kong, Japan, the United States, and Sweden.
The BSP also reported that for March 2018, non-residents’ investments in debt instruments issued by local affiliates (or intercompany borrowings) posted net inflows of $301 million, lower by 36.1 percent compared to its year-ago level.
Meanwhile, reinvestment of earnings increased by 12.6 percent to $63 million in March 2018 from $56 million in March 2017.
Dominguez earlier said that the increasing volume of FDIs supports the Duterte administration’s efforts to shift the economy from consumption- to investments-led growth, which would then help create decent, well-paying jobs for the country’s young, well-trained Filipinos entering the workforce in the coming years.
According to Dominguez, the government is revisiting its Foreign Investments Negative List (FINL) to open more areas for joint ventures and direct investments, reviewing its procedures to reduce red tape and shorten approval time for business start-ups, and exploring possibilities for expanded e-governance using digital technologies.
President Duterte recently signed the Ease of Doing Business Law, which creates a unified business application form and a central business portal to make it easier for investors to open or renew businesses, and mandates a zero-contact policy to reduce official corruption.
Dominguez said the President has also made the country a safer place for investors, with his campaign against corruption and criminality leading to a decrease in crime volume by 21.86 percent since the start of his administration.