'Sound Philippine macroeconomic fundamentals' attracting investors

Investors are demonstrating increased confidence in the Philippine economy, bolstered by "sound macroeconomic fundamentals", according to Bangko Sentral ng Pilipinas (BSP).

Figures revealed the value of foreign investments in the Philippines grew by more than a third at the end of last year, as stock prices surged.

The country's healthy growth prospects are drawing in more businesses, with portfolio, direct and other investment liabilities appreciating.

Throughout 2012, the Philippine Stock Exchange Index gained 33 per cent, closing at 5,812.73 points. This brought the country second only to Thailand among southeast Asian economies for growth - an upwards trajectory hoped to be repeated this year.

BSP identified that the country's "favourable payment dynamics" also helped the peso appreciate against the US dollar by 6.6 per cent. At the end of last year, the index closed at P41.192 against the greenback.

This has led to the stock of liabilities being pushed upwards, particularly in portfolio equity securities.

"About 72 percent of the increase in equity securities held by non-residents was due to changes in the market prices of securities, around 13 percent was attributed to exchange rate fluctuations, and the remaining 15 percent was due to transactions that materialised over the 12-month period," BSP explained.

The increase in foreign investment in the Philippines is part of a larger move to emerging markets, the bank also noted.

Uncertainty in Europe and underwhelming  growth in the US has driven companies and investors away from traditional business hubs.

Preliminary data of the international investment position of the country identified 39.1 per cent growth, on the back of "robust inflows in the financial account". At the end of the year total external financial liabilities exceeded the growth of total external financial assets. 

Total external financial assets increased year-on-year by 12.4 percent to $119.7 billion, while total external financial liabilities increased by 17.4 percent to reach $153.8 billion.

For businesses considering expanding into the Philippines, TMF can offer a range of services to determine viability, reduce risks, ensure compliance, control costs and simplify operations.

TMF Group experts 
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