Foreign investments dive 48% in 2008
abs-cbnNEWS.com | 03/10/2009 7:36 PM
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The Philippines saw a net inflow of $1.52 billion in foreign direct investments (FDI) last year, nearly 48 percent (47.9 percent) lower than $2.91 billion in 2007, the Bangko Sentral ng Pilipinas (BSP) announced Tuesday.
For the month of December alone, the BSP said the FDI stood at $89 million, 3.3 percent lower than the same period in 2007, and significantly lower than the $232-million inflows registered in November 2007.
Net equity capital flows last year amounted to $1.4 billion compared to the $1.32-billion level recorded over the same period in 2007. According to the BSP, major sources of equity capital flows include the United States, Japan, Singapore, South Korea, Germany, Malaysia, Taiwan, Hong Kong, United Kingdom, and the Netherlands.
"Other capital" accounts, which represented repayment by foreign affiliates abroad of trade credits for residents, had a net inflow of $261 million. On the other hand, reinvested earnings reversed to a net outflow of $91 million, owing to losses unrealized by some FDI businesses in the country last year.
The BSP said the bulk of the inflows were channeled to the manufacturing sector, particularly to shipbuilding and repair, auto electronics parts and paper manufacturing, and cigarette and other tobacco products. The central bank added that there were also inflows to recreational and cultural businesses, as well as mining and construction projects.
FDIs were expected to slow dramatically this year but the BSP has not released any projection, saying that it is still sorting through projects in the pipeline that could either be shelved or continued this year.
On the whole, however, the BSP downscaled its earlier projected level of foreign exchange reserves to $37.5 billion from $39 billion as overseas remittances are expected to go to a halt due to massive layoffs abroad. According to the BSP, remittances from overseas Filipino workers will reach $16.4 billion this year, unchanged from the same level in 2008.
The BSP has earlier projected a 6 to 9 percent expansion this year, but BSP Governor Amando Tetangco said the target would be adjusted with the contraction of major economies as a result of the global crisis.
"There is a very real danger that the global economy would weaken more and the Philippines has to face this. We might be an island of calm but we are at risk of a negative feedback loop if credit markets freeze up and economic activities grind to a halt," Tetangco said.
With the downscaling of the projected reserves, the government also revised its projected balance of payments position to $700 million from $500 million mainly because of lower oil prices.
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