Big inflows of portfolio investments

The Bangko Sentral ng PIlipinas (BSP) reported that net inflows (inflows minus outflows) of portfolio investments or “hot money” in the first 10 months of this year has reached $2.46 B, or 7x larger than same period last year’s level of only $358 million. See news report here.

This is good news for the country. While some sectors consider hot money as bad because of the high fluctuation in capital that they cause (they come in and out easily, causing sometimes major financial tremor), it should be taken positively.

They come in because some local companies want them here. Some local companies prefer to raise funds via portfolio investments than borrowing from banks for whatever reasons. That option should be made easily for them.

Besides, there are plenty of fiscal and corporate uncertainties in many rich countries in the world now. Like the endless threat of debt crisis in some European countries like Greece, Spain, Portugal and Ireland.

Local companies and the Philippine government should work more on improving the overall business environment, on stabilizing a level playing field for various players and businesses.

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