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MANILA - Despite its stellar economic performance in the first quarter, the Philippines suffered from net outflows of foreign direct investments at the start of the second quarter.
Unlike the fickle foreign portfolio flows, FDI pertains to money invested to establish new businesses or to expand existing ones, and as such generates jobs.
In a statement, the Bangko Sentral ng Pilipinas said FDI in April reversed to net outflows of $13 million from net inflows of $78 million in the same month last year.
This after foreign companies siphoned off more money from their Philippine units than they invested.
Reinvested earnings fell to $12 million this year from $36 million last year, whereas other capital flows - representing borrowing or lending by foreign companies and their local subsidiaries - reversed to net outflows of $38 million this year from net inflows of $19 million in 2011.
Equity capital - which pertains to fresh infusions of money - fell to $13 million this year from $23 million last year.
"Notwithstanding the Philippines' favorable macroeconomic conditions, investors were wary of potential spillovers of the euro zone's sovereign credit problems," BSP Governor Amando M. Tetangco Jr. said.
The Philippine economy grew a faster-than-expected 6.4 percent in the January to March period, making it Asia's second fastest after China.
"In April, concerns about the euro zone escalated as reflected in sharp increases in borrowing costs for some European countries, and this has dampened global risk appetite," Tetangco said, referring to efforts by debt-troubled euro zone countries to raise money from the bond market during the period.
Even with the April decline, FDI in the first four months of this year was 47 percent ahead of last year as the $778 million net inflows last January caused the year-to-date figure to swell to $837 million.
The bulk of the inflows were channeled to manufacturing, real estate, wholesale and retail, financial and insurance, and mining and quarrying sectors, the BSP said.
The US, Australia, the Netherlands, United Kingdom, Japan and Bermuda were the main sources of fresh equity capital in the first four months of 2012.
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