Wednesday, 13 January 2010

Foreign direct investments stay positive

D. G. K. Carreon

FOREIGN DIRECT investments (FDI) remain positive given the country’s strong fundamentals, the Bangko Sentral ng Pilipinas (BSP) yesterday said.

FDI inflows for the ten months to October last year rose by 17.9% to $1.328 billion, the central bank reported.

For October alone, "All FDI components posted net inflows ... reflecting favorable investor sentiment on the country’s underlying macroeconomic fundamentals," BSP Governor Amando M. Tetangco, Jr. said in a statement.

Equity capital placements, reinvested earnings and other accounts recorded inflows of $41 million, $11 million and $7 million, respectively, for the month.

FDI, being long term, are considered a better gauge of investor interest than portfolio inflows or hot money which can easily be pulled out of the country.
Net equity capital placements reached $1.36 billion in during the ten-month period, higher than the $1.06 billion recorded in 2008.

The bulk of the investments came from the United States, Japan, Hong Kong, and the Netherlands.

Reinvested earnings hit $125 million, a turnaround from the net outflow of $131 million in the same period in 2008.

But borrowing and lending between foreign firms and their local subsidiaries turned negative, with an outflow of $157 million from 2008’s inflow of $197 million.

FDI are expected to have hit $1.5 billion last year and grow to $1.8 billion this year.

Sought for comments, University of Asia and the Pacific economist Peter Lee U said the challenges to attracting investments remained the same.

"It’s the age-old complaints: red tape, corruption, high labor cost and weak infrastructure reflected in high cost of power," he said.

Investors, he added, could wait for the results of the elections and a recovery in demand before deciding whether or not to commit funds. --

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