By Eileen A. Mencias

Net foreign direct investments hit $1.65 billion in the first 11 months of 2008, down 40 percent year-on-year, due to the global downturn, the Bangko Sentral said in a statement.

Equity capital inflows amounted to $1.21 billion in the 11-month period while withdrawals totaled $193 million.

Reinvested earnings, meanwhile, fell 13 percent to $394 million as big foreign companies asked their subsidiaries to remit earnings. The other capital, which represent loan and loan repayments between a foreign company and its local subsidiary, dropped 38 percent to $238 million.

Net inflows in November climbed $31 million to $232 million from October, after investors in Hong Kong purchased shares of stock in a local mining company. Equity placements amounted to $175 million for the month while withdrawals reached just $15 million. Reinvested earnings stood at $20 million and other capital yielded $62 million.

Huge capital flight and the decline in exports brought the country?s balance of payments surplus down to just $88 million last year from an all-time high of $8.6 billion in 2007.

The central bank has not firmed up its forecasts on investments and the BoP. The IMF earlier projected a deficit of $800 million in the BoP. this year. A deficit in the BoP means exports, remittances, loans and investments generated in the economy are not enough to pay for imports, debt servicing and the withdrawal of capital.

The IMF made the $800-million BoP deficit forecast based on a growth assumption of 3.5 percent this year. The fund scaled down its growth forecast this year to 2.25 percent last week.

The IMF expects a net inflow in foreign direct investments of $1.1 billion this year, based on the 3.5-percent growth assumption. It estimates last year?s foreign direct investments at $1.2 billion, less than the $1.4-billion net inflow reported at the end of October 2008.

The IMF still expects a net outflow in foreign portfolio investments this year of $1.3 billion. Last year, the net outflow in foreign portfolio investments hit $1.3 billion, higher than the IMF?s forecast of $900 million.

The central bank reported that the country?s gross international reserves hit an all-time high of $39.6 billion, enough to pay for more than six times the country?s imports and thrice the country?s maturing short term debt.

The foreign reserves were $2 billion more than December levels due mainly to the national government?s $1.5-billion global bond issue and the remittance of the $987.5 million and privatization proceeds of National Power Corp.