Bangko Sentral: FDIs fall 38.7% in first 2 months

Foreign direct investments (FDIs) fell by 38.7 percent in the first two months of the year as political crises rocked the Middle East and North Africa while debt and deficit burdened Europe and inflation worries led to tighter monetary policies in Asia. Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said FDI totaled $304 million as of end-February, plunging by $192 million from $496 million booked in the same period last year. There were 43.6 percent less equity placements ($57 million) in the first two months of the year from $101 million. Equity withdrawals plunged 57.7 percent to $22 million from $52 million. Tetangco said the inflows were poured into real estate, mining and quarrying, manufacturing — particularly chemical products — administrative and support services activities like business process outsourcing, and agriculture. The bulk of the equity came from the US, Singapore, Japan, Hong Kong, and Germany. Reinvested earnings dropped 41 percent to $88 million in the first two months from $149 million a year earlier as foreign enterprises held their earnings in local corporations in light of the country's improving business sentiment. The net inflow of other capital account fell to $181 million from P298 million, made up mostly of inter-company borrowing between foreign direct investors and their subsidiaries or affiliates in the Philippines. The BSP sees the country's gross international reserves reaching a record $70 billion this year, then rising to $75 billion by 2012. The balance of payments surplus is forecast to reach $6.7 billion this year and $4.4 billion in 2012. — ELR/VS, GMA News