Philippines foreign investments at $2.1 Billion

Manila, Philippines - Nov 15, 2005

The net inflow of Philippines foreign investments registered with the Bangko Sentral ng Pilipinas (BSP) from January to November 4 reached US $ 2.1 billion, over seven times the amount posted in the same period last year.

BSP officer-in-charge Armando Suratos said the bulk of the foreign portfolio investments were placed in shares of stock listed in the Philippine Stock Exchange while the rest went to peso-denominated government securities, peso time deposits in banks and money market instruments issued by the local private sector.

"These investments were funded with new inward remittances of foreign exchange converted into peso through banks operating in the Philippines," Suratos said.

The peso has been steadily appreciating, as a result of strong inflows of foreign portfolio investments.

BSP data showed that a total of US $5.0118 billion of portfolio investments entered the country from January to November 4, 2005, while US $2.943 billion went out, leaving a net inflow of US $2.1 billion.

Suratos said the net inflow posted as of November 4 was already 4.2 times the amount of short-term foreign investments that entered the economy for the entire 2004.

He said the implementation of the expanded value-added tax (EVAT), which began on November 1, stirred enough optimism among foreign investors to entice them to place large investments in the country, allowing it to post a net inflow of US $21.4 million on the week ending on November 4 alone.

Suratos said the optimism was fueled by expectations that EVAT "will improve the country's fiscal condition and credit ratings."

An improvement in the credit rating would allow the reduction of the country’s borrowing cost, improving the government's fiscal position and business confidence on its capacity to settle its maturing obligations and spend on critical infrastructures that would boost growth.

"The continued easing of world oil prices and the appreciation of the peso, bolstered by substantial OFW (overseas Filipino workers) remittances, also boosted investor sentiment during the week," he said.

(PNA)

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