Philippines: FDIs and Strong Peso Boosting Economy Bunye

Apr. 12, 2007

“Foreign Direct Investments (FDIs) and the strong peso are boosting us.”

Thus enthused Press Secretary and Presidential Spokesperson Ignacio R. Bunye over the report of the Bangko Sentral ng Pilipinas (BSP) that FDIs “recorded net inflows of US$357 million, or a year-on-year growth of almost 51 percent” in January 2007 alone.

“FDIs are markers of global confidence while the strong peso is the handiwork of Filipino excellence and patriotism exemplified by our overseas contract workers (OFWs),” Bunye said.

The BSP or central bank explained that the growth in FDI last January “was boosted mainly by the net inflows from the reinvested earnings account which amounted to US$220 million, from only US$2 million last year.”

This, as “foreign banks opted to retain their earnings in their local branches given the continued positive economic prospects,” the BSP said.

On Tuesday, the peso breached the P48 per US dollar barrier to close at a six-year high of P47.95 at the Philippine Dealing System, the BSP said.

FDI inflows are expected to “remain positive” the entire year, what with investors taking advantage of the countrys improving investment climate, according to the BSP which pointed to the United States and Japan as the “major sources” of the FDI flows at the start of the year.

Still, Secretary Bunye stressed that “we have to keep up the safeguards that are already in place to protect our exporters and drive up the tempo of domestic investments.”

The BSP said net equity capital inflows rose by almost 70 percent in January to US$70 million compared to the year-ago level, with fresh capital infusion in long-term investments reaching US$129 million.

“In particular, the industries which benefited most from these inflows included manufacturing (chemical products, electronics), services (international courier), real estate, financial intermediation, and construction,” the central bank added.

“Loans extended by head offices to their subsidiaries in the Philippines — comprising bulk of the other capital account — also registered a net inflow of US$67 million,” the BSP said. (PIA Dispatch)

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