Net FDIs down 39% as of July – BSP

Published October 11, 2019, 12:00 AM

by manilabulletin_admin

By Lee C. Chipongian

The country’s net foreign direct investments (FDI) dropped by 39.1 percent to $4.1 billion as of July this year from $6.8 billion as of end July last year, the central bank reported.

Bangko Sentral ng Pilipinas (BSP) logo

Bangko Sentral ng Pilipinas (BSP) attributed the steep decline to the “weak pace of global economic activity that took a toll on investors’ business confidence and investment decisions globally.”

FDIs as reported by the BSP are actual investment inflows as equity capital, reinvestment of earnings, and borrowings between affiliates.

According to the BSP, the seven-month net FDI was lower because of the 75.1 percent decline in non-residents’ net investments in equity capital at $459 million from $1.8 billion same time in 2018.

Non-resident investments in debt instruments or intercompany borrowings between affiliates mostly, decreased by 30.3 percent to $3.1 billion from $4.4 billion.
The BSP further noted a decline in equity capital placements which amounted to $1 billion end-July, down by 49.2 percent from $2 billion last year.

Equity capital withdrawals, in the meantime, were up by 215.8 percent to $569 million from $180 million. Inflows were traced from investors located in Japan, the US, Singapore, China, and South Korea. These funds were invested in these sectors: Financial and insurance; real estate; manufacturing; transportation and storage; and administrative and support service industries.

Reinvestment of earnings also increased by 12.6 percent to $595 million from $528 million.

For the month of July only, net FDI decreased further by 41.4 percent to $543 million compared to $926 million same time last year.

Non-residents’ net investments in debt instruments decreased by 39.5 percent to $357 million from $590 million while non-residents’ net investments in equity capital fell by 62.2 percent to $99 million from $261 million.

Investments as equity capital declined by 39.6 percent to $168 million in July from $278 million last year. Equity capital withdrawals increased by 302.4 percent to $69 million from $17 million.

The BSP said equity capital flows came from investors in Japan, Germany, Singapore, the US, and South Korea, and placed their money in financial and insurance, real estate, manufacturing, and human health and social work industries.

Reinvestment of earnings, in the meantime, was up by 15.8 percent to $87 million in July from $75 million in 2018.

The BSP has a net FDI projection of $9 billion for 2019. On Tuesday, BSP Governor Benjamin E. Diokno said the $9-billion projection is achievable as he expects increased inflows in the second half of the year.