BSP says June FDI flow shifts to positive $128M

Foreign companies operating in the country reinvested their income and borrowed money from overseas parents to boost their Philippine operations in June, reversing the negative trend in foreign direct investments (FDIs) from a year earlier, the Bangko Sentral ng Pilipinas (BSP) said Tuesday. Total FDIs that came in June amounted to $128 million, compared with $123 million that went out of the country in the same month last year, the central bank said in a statement. In the six months to June, re-invested earnings grew more that 31 times to $222 million from $7 million in the comparable first half last year. Other capital account surged by 309 percent to $404 million from a negative $193 million. “This reflected the boost in corporate earnings in the first semester of 2010 that encouraged investors to retain earnings/profits in local firms," said BSP Gov. Amando M. Tetangco Jr. said in the statement. "Positive balances were registered across all categories of the FDI as the economy continued to attract capital from non-resident investors given the country’s sound macroeconomic fundamentals and the optimism on the reform agenda of the new administration," Tetangco said. Central bank data showed that equity capital totaled $60 million in June from $1 million a year earlier after equity placements surged by 88.2 percent to $64 million from $34 million in the same comparable period. Equity that was withdrawn from the country plunged by 87.8 percent to $4 million in June from $33 million in the same month a year earlier, according to the central bank. But total FDIs fell by 42.4 percent to $732 million in the first six months from $1.27 billion a year earlier in the absence of big-ticket placements. From January to June, Tetangco pointed out that equity placements also plunged by 80.5 percent to $294 million from $1.508 billion in the same period last year. Monetary authorities said a number of equity capital was placed in the privatization of a power utility and the acquisition of a significant number of shares in a beverage firm last year. In 2009, China’s largest electricity provider State Grid Corp. and Monte Oro Grid Resources Corp. invested in state-owned National Transmission Corp. Japanese brewer Kirin Holdings also acquired a stake in San Miguel Brewery that was owned by conglomerate San Miguel Corp. Investors in the first six months of the year came from the US, Switzerland, Japan, Netherlands, Singapore, Ireland, and Hong Kong, according to Bangko Sentral. Money was placed in businesses that include manufacturing, services, real estate, financial intermediation, utilities, mining, transportation and storage, and hotels and restaurants. Based on its numbers in the first six months, the central bank said it now expects total FDI for the year at $2 billion from an earlier forecast of $1.8 billion and from $1.95 billion last year. —VS, GMANews.TV