Kirin's stake in SMB ups April foreign investments by 154%
By Karen Flores, abs-cbnNEWS.com | 07/10/2009 6:44 PM
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MANILA - A Japanese company's investment in a local brewery helped increase the Philippines' foreign direct investments (FDI) by 154.7% in April--a turnaround from double-digit year-on-year declines in the previous months.
The Bangko Sentral ng Pilipinas (BSP) announced on Friday that FDIs reached $601 million in April, a 154.7% rise from $236 million recorded in the same month last year. Last month, the Philippines had a net outflow of $27 million.
BSP said that of the amount, it received $619 million in equity capital in April, a huge jump from $70 million in the same period last year. Bulk of capital infusion came from "a foreign firm's share acquisition in a local beverage manufacturing firm."
In the same month, Japan's second-largest brewery Kirin Holdings Co. Ltd. announced that it was acquiring additional 778.5 million shares in San Miguel Brewery Inc. from the public as part of its mandatory tender offer after acquiring an initial 43.25%. The additional 5.05% stake of Kirin in San Miguel Brewery was worth around P6.89 billion (around $300 million).
"The rebound in FDI inflows given the global economic conditions reflected foreign investors' confidence in the country's macroeconomic fundamentals," the BSP said in its report.
The government is still expecting the Philippines to sustain growth this year amid the global economic crisis. However, it has lowered its targets to a range of 0.8 to 1.8%, following the economy's dismal 0.4-percent growth for the first three months of the year.
Other key economic indicators such as exports and imports have been showing double-digit declines for the past months. Remittances have still been growing, but the pace of growth has slowed to less than 5% for the past months, compared to double-digit monthly increases in the previous years.
Near target
The latest figure brings the country's FDIs for the first four months to $648 million, a 29.1% growth from $502 million in the same period last year. This is only $52 million short of the BSP's full-year target for FDIs at $700 million.
On the other hand, net equity capital for the four-month period hit $627 million from $283 million in the same period last year. These went to manufacturing, real estate, construction, financial intermediation, and trade and commerce sectors, mostly by investors from Japan and the United States.
Reinvested earnings, meanwhile, reached $67 million as of end-April, a reversal from the $233-million net outflow recorded in the same period last year. The BSP said positive news on corporate earnings results for the first quarter encouraged investors to retain profits in local banks and enterprises.
'Key' to recovery
Earlier, the Joint Foreign Chambers of the Philippines (JFC) identified FDIs as a key driver for the country's recovery from the economic crisis, laying out concrete steps to improve the country's business environment.
Such measures include the reduction of barriers to foreign participation, more forceful action against corruption and smuggling, the creation of more modern infrastructure, and improvements in the country's education system, among others.
"As foreign investors and employers, we fully share the ambition of Filipinos for the country to become an advanced economy in the decades ahead. Our members are prepared to invest continuously and heavily and to create millions of new jobs, but only if the nation can create a better business climate which will enable future prosperity," the 7-member chamber said in its report.
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