The Philippine affiliates of foreign-owned businesses poured even more money into the various enterprises in May and helped buoy foreign direct investments higher during the period.
According to the Bangko Sentral ng Pilipinas, the investments were in the form of debt the local affiliates issued and bought promptly by their foreign principals.
The BSP said the debt notes of Philippine-based affiliates more than doubled in May to $1.3 billion from only $564 million the year before, representing an acceleration by 135.7 percent.
That the debt notes of Philippine affiliates were lapped up quickly by their foreign principals is an indication of the degree of confidence the foreign investment community view the domestic investment scene, according to the BSP.
Affiliated companies typically issue debt notes on foreign principals to finance expansion programs in the Philippines, generating not just job opportunities for the locals but tax revenue for the nation’s coffers as well.
Debt notes of this nature issued thus far this year totaled $3.129 billion, up 17.3 percent from year ago of only $2.668 billion.
In part as consequence of these transactions, foreign direct investments over five months this year already total $4.847 billion, up 49 percent from last year’s $3.254 billion.
These are funds that are actually applied as bricks-and-mortar businesses in the Philippines and thus preferred by regulators over the “hot” money or portfolio investments of foreign principals.
Portfolio fund managers typically invest in peso-denominated stock and bond issuances freely available in the local market and may be quickly withdrawn at the merest hint of trouble in the Philippines or promise of greater returns somewhere outside the country.
The withdraw-anytime money of portfolio fund managers have earned them a volatile reputation and because of this host countries would rather that their foreign direct counterparts come over and make the placements where their mouths are.
Data show foreign direct placements totaling $257 million in May alone against foreign direct withdrawals of $15 million.
The reinvestments of Philippine affiliates during the month allowed the equity activities of foreign direct investors to hit $316 million, up 179 percent from a year ago when this stood at only $113 million.
Over a five-month period, the equity activities of these investors stood 193 percent higher this year to $1.718 billion from last year’s $586 million, according to BSP data.
The BSP said the equity capital placements were sourced primarily from Singapore, the United Kingdom, Germany, the United States and Japan.
These were channeled largely to manufacturing; real estate; electricity, gas, steam and air conditioning supply; financial and insurance; and professional, scientific and technical activities.