Foreign direct investments (FDI) in the first 10 months, the kind that remains invested for the long haul, is already more than $900 million, beyond the target level in 2014, the Bangko Sentral ng Pilipinas (BSP) said on Monday.
According to the BSP, FDI from January to October aggregated $5.32 billion on net basis, an indication of the positive long-haul view of foreign fund managers who regard the Philippines as a lucrative investment destination at a time when the potential return of a foreign-currency investment is close to zero.
Based on BSP data, capital put in by international investors in the Philippines seeking long-term returns surged in October last year and exceeded the government’s target anew.
The BSP reported on Monday that FDI doubled to $444 million in October last year, from only $219 million in October of 2013.
Compared to the previous month, however, the net FDI inflows slowed a bit in October from the $680 million the BSP reported the previous September.
This pushed the total FDI to $5.32 billion in the first 10 months of 2014. This was also 64.1 percent higher than only $3.24 billion worth of FDI a year earlier.
According also to the BSP, this was the second consecutive month that the FDI net inflows exceeded the revised target of $4.4 billion for 2014.
“The marked increase in FDI net inflows during the month was largely attributable to the surge in net equity capital placements to $213 million, from $73 million in the previous year,” the central bank said.
This, according to the central bank, was an indicator of favorable investor regard for the Philippines and how its so-called macroeconomic fundamentals are managed by its fiscal and monetary authorities.
Equity capital investments for the period came mostly from the US, Hong Kong, Japan, Singapore and Taiwan.
The investments were channeled mostly to the financial and insurance, manufacturing, real-estate, wholesale and retail trade, and the transportation and storage sectors.
Placements of foreign direct investors in debt instruments issued by local affiliates also expanded by 55.4 percent to hit $3.3 billion in October 2014, from the $2.1 billion seen in the same month in 2013.
FDI are favored over the more volatile and flighty portfolio investments, also known as “hot” or speculative money, which dart in and out of markets quickly as the rewards prove greater and the risks significantly lower.
FDI are typically invested in so-called brick-and-mortar businesses in the Philippines that generate not only employment for Filipinos but tax revenues for the national coffers.