Philippines’ Foreign Direct Investments seen topping a new record


Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said the Philippines is expected to attract more foreign direct investments in the coming months, after net inflows in the first eight months topped a record $4 billion.

“If they [foreign investors] are just looking at the fundamentals, I think we should merit a higher share of FDIs because the macro-economic fundamentals continue to improve,” Guinigundo told reporters over the weekend.

“The government is also attempting to set the stage for more infra, power. So if they are just there for the long haul, there is every reason for them not only to stay here but relocate here in the Philippines. In other words, the prospects here continue to be bright,” Guinigundo said.

Latest data from the Bangko Sentral showed FDIs posted a net inflow for the 13th consecutive month in July, with $436 million.

This brought net FDI inflows in the first eight months to $4 billion, up by 56.1 percent from $2.6 billion absorbed by the country a year ago.

Net inflows of FDI jumped 20 percent to a previous record $3.86 billion in 2013 from $3.215 billion in 2012. The 2013 net inflows also surpassed the BSP’s projection of $2.1 billion for the year.

Guinigundo, however, said registered foreign portfolio investments or hot money were not as robust as FDIs this year.

“These are the footloose capitals. Any small change in market sentiment could drive them out of one, let’s say, emerging market in favor of the so-called safe haven markets,” he said.

Foreign portfolio investments are overseas funds that are temporarily invested in local stocks, government securities and money market. These are also called “hot money” because of the ease they are invested in and taken out of the local markets.

“The problem is even those healthy emerging markets are also suffering. The US dollar continues to strengthen very strongly. So, when the US dollar appreciates, domestic currency depreciates and this is something regional,” Guinigundo said.

Hot money posted a net outflow of $324 million in September and $897 million in the first nine months of 2014, a sharp turnaround from a net inflow of $2.6 billion in the same period last year.

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