Q1 foreign direct investment amounts to $390M – BSP

Foreign direct investment totaled $396 million in the first quarter, up by 18.6 percent from January to March a year earlier, the Bangko Sentral ng Pilipinas (BSP) said Thursday. Money borrowed by Philippine-based subsidiaries from parent firms abroad largely boosted foreign direct investments from January to March, the BSP said. Such inter-company loans transferred into the country totaled $319 million, compared to $48 million that went out in the first three months of 2009. The capital funds were largely allotted by business process outsourcing firms and utilities companies to finance expansion programs, the BSP said. Foreign direct investment is a measure of foreign ownership of productive assets, such as factories, mines and land. However, reinvested earnings totaled only $45 million in January-March quarter and equity capital placements amounted to $32 million. Reinvested earnings reflect how foreign principals perceive business prospects and whether they are encouraged to plow back earnings into the business or repatriate the money back to the mother unit. The BSP said reinvested earnings amounted to $78 million in net outflows in the first three months of 2009. Net equity capital was also down at $45 million from $460 million in the same comparable period. BSP governor Amando M. Tetangco Jr. said it was risk aversion that caused the 90 drop in invested equity capital. “Specifically, gross equity capital placements amounting to $131 million were lower than those of the previous year, which totaled $471 million, Tetangco said. “Investors came mostly from the United States, Switzerland, Japan, the Netherlands and Singapore. The manufacturing, utilities, services, financial intermediation and real estate sectors were the recipients of these equity capital flows," Tetangco said. —VS, GMANews.TV