The Bangko Sentral ng Pilipinas (BSP), which registers non-residents’ FDIs said these are expected to reach $900 million this year and $1.2 billion in 2006. Investments will come from manufacturing, energy and mining sectors.

Based on the latest FDI report, higher net FDI flows year-to-date were attributed to net inflows of equity capital which remained strong, up 45.3 percent to $933 million because of the combined effects of higher equity placements and lower withdrawals.

The BSP added that fresh equity capital went into the manufacturing sector or $506 million of total, while real estate attracted $91 million and services with $16 million. Hong Kong investors are the period’s top FDI source.

"Another contributory factor to the nine-month expansion in FDI flows was the substantial decline in the net outflow in the ‘other capital’ component of FDI," BSP Governor Amando M. Tetangco Jr. said. This is comprised of inter-company borrowings between investor companies and their corresponding foreign direct investors, which reached $112 million from the year-ago level of $259 million.

Tetangco said higher net inflows of FDI in prior months more than compensated for the $87-million net contraction in September. "While net equity capital infusion in September remained in surplus, this was not adequate to offset the net outflow in the inter-company accounts during the month," he said.

FDIs are major sources of cash flows to boost the country’s gross international reserves. Besides foreign investments and exports, overseas Filipino workers’ remittances complete the dollar reserve components.

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.

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.

The influx of investments came from Hong Kong and Japan, the country’s largest investors during the period. Other FDIs are from China, Australia and the US.