BSP Governor Amando M. Tetangco Jr. said however that the outlook on FDIs remain positive, especially in the opening of more mining contracts in the country, which are considered big-ticket investment projects.
"(We are) looking at investments in mining and energy this year and the next," he said. Tetangco added the central bank would coordinate with other government agencies to bring in the FDIs in 2006.
The Supreme Court upheld the legitimacy of the 1995 Philippine Mining Act last December and this is expected to help the industry attract new investments. This year and in 2006 the mining sector expects some $3-billion worth of new investments from the United States, China and Australia.
In the meantime, BSP projection for non-resident FDIs was also downgraded to $900 million this year from the $1.1 billion target set last November during an inter-agency Development Budget Coordinating Committee meeting.
In 2004 FDIs only reached $100 million and non-resident FDIs’ $500 million. The investment climate at the time was mired with political uncertainties since it was an election year.
FDI inflows are included in the country’s balance of payments, which summarizes the country’s economic transactions with the rest of the world. They are major sources of cash flows to boost the country’s gross international reserves. Foreign exchange from exports and overseas Filipino workers’ remittances complete the dollar reserve components.
So far as of July this year net FDIs have reached $499 million, 107 percent higher from $241 million in July 2004. Approved FDIs represent the amount of proposed contribution or share of foreigners to various projects in the country as approved and registered by the Board of Investments and the export processing zones.
Earlier the BSP was hoping to register between $1 billion to $1.2 billion of FDIs since approvals made in late 2004 have not yet been included and this will boost the current FDI numbers.
Registered FDIs or those listed by the BSP only represent foreign equity investments or paid-up capital. On the other hand, the BOP FDIs cover cash and non-cash transactions on foreign direct investment flows that are coursed through the banking system. Machinery, equipment and reinvested earnings, which are not cash transactions are included if data are available.
In the meantime, FDIs continued to grow in the first seven months of the year fuelled by the inflow of investments into the manufacturing, real estate, financial and services – for example business product outsourcing — sectors.
The influx of investments came from Hong Kong and Japan, the country’s largest investors during the period.
