Will the Real Foreign Investments Data Pls. Stand Up? Henry Sy’s Three Secrets to Attain Forbes Philippine Richest

Will the Real Foreign Investments Data Pls. Stand Up? Henry Sy’s Three Secrets to Attain Forbes Philippine Richest

Will the Real Foreign Investments Data Pls. Stand Up?

The Philippine Statistics Authority and the Bangko Sentral ng Pilipinas recently released their Foreign Investments report. The odd part is that their numbers run in opposite directions.

Some notes on their data:

The BSP’s FDI data represent investment “flows”. The PSA’s numbers are about investment pledges and or commitments reported by different investment agencies.

In fact, the PSA’s numbers precede BSP.  That’s because when pledges are realized into investments, they become “flows”

Nevertheless, their difference stems from the BSP’s new investments and reinvestments in contrast to the PSA’s fresh investments

Importantly, the BSP overhauled their 2016 and 2017 data which magnified the gains.

Here is the BSP in celebration for hitting a supposed milestone: (bold added)

Foreign direct investment (FDI) net inflows reached a record high of US$10 billion in 2017, up by 21.4 percent from the year-ago level. Investors continue to view the country as a favorable investment destination on the back of the country’s sound macroeconomic fundamentals and growth prospects. All major FDI components registered increases during the year. In particular, net equity capital investments expanded by 25.9 percent to US$3.3 billion, with gross placements of US$3.7 billion exceeding withdrawals of US$479 million. Equity capital placements originated largely from the Netherlands, Singapore, the United States, Japan, and Hong Kong SAR. Byeconomic activity, equity capital placements were channeled mainly to gas, steam and air-conditioning supply; manufacturing; real estate; construction; and wholesale and retail trade activities. Net availment of debt instruments (consisting mainly of intercompany borrowings/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines) rose by 20.7 percent year-on-year to US$6 billion. Reinvestment of earnings increased by 9.3 percent to reach US$776 million during the year.

In December 2017, FDI registered US$699 million net inflows. This was lower, however, by 9 percent from the level recorded a year ago due largely to the 19.1 percent drop in net investments in debt instruments to US$335 million. Net placements of equity capital likewise declined moderately by 0.4 percent to US$305 million. On a gross basis, equity capital infusions reached US$328 million, originating mainly from Singapore, Japan, the Netherlands, the United States, and Luxembourg. The said placements were invested largely in manufacturing; real estate; wholesale and retail trade; information and communication; and arts, entertainment and recreation activities. Meanwhile, reinvestment of earnings grew by 24.1 percent to US$59 million in December 2017.

Debt (intercompany borrowings/lending between foreign direct investors and their subsidiaries/affiliates) has been the dominant form of BSP FDI since 2013.

In 2017, debt constituted a 59.8% share, while equity and reinvestments accounted for 32.47% and 7.72%, respectively.

Since the use of debt maybe diverted to activities other than investments, such as repayments, this data may not be an accurate gauge of investments

Moreover, US dollar-denominated liabilities are “dollar short” positions. US dollar-denominated liabilities are magnified when the peso sinks.

Now let us apply the BSP’s assertion that “Investors continue to view the country as a favorable investment destination on the back of the country’s sound macroeconomic fundamentals and growth prospects” on fresh investments.

From the Philippine Statistics Authority

 

Total foreign investments (FI) approved in the fourth quarter of 2017 by the seven investment promotion agencies (IPAs), namely: Board of Investments (BOI), Clark Development Corporation (CDC), Philippine Economic Zone Authority (PEZA), and Subic Bay Metropolitan Authority (SBMA) as well as the Authority of the Freeport Area of Bataan (AFAB), BOI-Autonomous Region of Muslim Mindanao (BOI-ARMM), and Cagayan Economic Zone Authority (CEZA) amounted to PhP 21.6 billion. This was 82.8 percent lower compared with the PhP 125.7 billion approved in the same period of the previous year. Meanwhile, total approved FI for 2017 reached PhP 105.6 billion,lower by 51.8 percent from PhP 219.0 billion in the previous year.

The top three prospective investing countries for the last quarter of 2017 were Japan, USA and Singapore. Japan committed PhP 5.2 billion or 24.0 percent share of the total approved investments during the quarter. USA and Singapore pledged PhP 3.2 billion and PhP 1.8 billion, or 14.9 percent and 8.3 percent of the total approved FI, respectively.

Manufacturing would receive the largest amount of PhP 8.3 billion, representing 38.4 percent of the total foreign investments approved in the last quarter of 2017. Real Estate Activities came in second with investment pledges valued at PhP 5.1 billion for 23.5 percent share. Administrative and Support Service Activities followed with investment pledges of PhP 3.5 billion for a share of 16.0 percent .

By region, majority of the approved foreign investments in the fourth quarter of 2017 would be intended to finance projects in CALABARZON amounting to PhP 6.4 billion or 29.5 percent . National Capital Region would receive the second highest amount with PhP5.5 billion, representing 25.4 percent, followed by Central Luzon with PhP 4.9 billion or 22.6 percent .

Approved investments of foreign and Filipino nationals reached PhP 282.4 billion in the last quarter of 2017, up by 2.8 percent compared with PhP 274.8 billion in the previous year. Filipino nationals continued to dominate the investments approved during the quarter, sharing 92.4 percent or PhP 260.9 billion worth of pledges.

Total projects of foreign and Filipino investors approved by the seven IPAs for the fourth quarter of 2017 are expected to generate 29,813 jobs. Out of the total anticipated jobs for the period, 64.1 percent would come from projects with foreign interest.

What happened to the “favorable investment destination on the back of the country’s sound macroeconomic fundamentals and growth prospects”???

Sadly, there is no way to accurately know whether the numbers spouted by these agencies are accurate or not.

The diametrically opposite reports demonstrate that when tortured enough, data will confess to anything to quote Ronald Coase.

Henry Sy’s Three Secrets to Attain Forbes Philippine Richest

Oh, about that the 11-year Henry Sy as the richest Philippine resident

From the CNN,

Retail magnate Henry Sy is still the richest person in the country with a net worth of $20 billion or P1.04 trillion, according to business magazine Forbes.

This is the 11th year in a row Sy topped the list of the richest people in the Philippines. His net worth is almost double compared to last year, which was at $12.7 billion or P 660.26 billion.

The Forbes methodology to arrive at determining individual fortunes

The Forbes World’s Billionaires list is a snapshot of wealth using stock prices and exchange rates from February 9, 2018. Some people will become richer or poorer within weeks—even days—of publication. For example, Jeff Bezos’ net worth climbed more than $12 billion in the two weeks between our measuring date for stock prices and when this issue went to press. We list individuals rather than multigenerational families who share large fortunes, though we include wealth belonging to a billionaire’s spouse and children if that person is the founder of the fortune. In some cases we list siblings or couples together if the ownership breakdown among them isn’t clear, but here an estimated net worth of $1 billion per person is needed to make the cut. We value a variety of assets, including private companies, real estate, art, yachts and more. We don’t pretend to know each billionaire’s private balance sheet (though some provide it). When documentation isn’t supplied or available, we discount fortunes.

Well, here is the Sy family’s path to Forbes…

 

First, have some friends frantically bid up on your stocks at the close of each session.

Second, use your companies to embellish stock prices through cross purchases

Three, borrow money to finance such undertaking.