By Lee C. Chipongian
Net foreign direct investments (FDI) in the first nine months of the year dropped by a hefty 36.9 percent to $5.1 billion as against the $8.1 billion inflows in the same period in 2018, the Bangko Sentral ng Pilipinas (BSP) reported.
In a statement, the BSP said the “slowdown in inflows reflected the adverse effects of the prolonged trade disputes, which continued to affect global growth negatively and prompted foreign investors to hold off their investment plans in emerging markets including the Philippines, until global growth outlook improves.”
The BSP said non-residents’ net investments in debt instruments dropped by
32.6 percent to $3.7 billion during the period from $5.5 billion last year. Equity capital also fell by 66.7 percent to $632 million from $1.9 billion.
“Net equity capital investments decreased as placements dipped by 45.7 percent to $1.2 billion (from $2.3 billion), while withdrawals increased by 58.7 percent to $607 million (from $382 million),” the BSP noted. Equity capital placements came from investors in Japan, the US, Singapore, China, and South Korea.
The BSP said “industries that benefited from said capital infusions were financial and insurance, real estate, and manufacturing.”
As for reinvestment of earnings, this went up to $746 million from $663 million same time last year.
For the month of September only, net FDI totaled $566 million, 2.9 percent down from $582 million same time in 2018.
“This was mainly due to the decline in non-residents’ net investments in debt instruments,” said the BSP. “However, the reversal of net equity capital investments from net outflows to net inflows mitigated the decrease in net investments in debt instruments.”
According to the BSP, net investments in debt instruments declined by 36 percent to $395 million from $618 million while non-residents’ net equity capital investments rose by 182 percent to $96 million. This came from net equity capital withdrawals of $117 million as placements increased by 79.5 percent from $69 million to $125 million while withdrawals declined by 84.8 percent from $187 million to $28 million, the BSP stated.