Net foreign direct investment (FDI) inflows declined by 25.6 percent in the January to May period to $2.379 billion from $3.196 billion same time in 2019, the Bangko Sentral ng Pilipinas (BSP) reported Wednesday.
For the month of May only, net FDIs performed better and increased by 42.4 percent to $399 million from $280 million in the same month last year.
The BSP said it was the net inflows of May that prevented a larger decrease in the cumulative FDI data.
“The positive growth (for the month of May) represents a reversal from the last three consecutive months of decline attributed largely to the weak global outlook and investors’ confidence following the pandemic,” said the BSP. “The stronger FDI performance during the month relative to the level last year was on account of the increase in non-residents’ net investments in equity capital and debt instruments,” it added.
The net investments in debt instruments increased by 40.8 percent to $236 million in May compared to $168 million same time in 2019.
Also in May, equity capital placements went up by 8.1 percent to $80 million from $74 million while withdrawals dropped by 96 percent to $3 million from $73 million last year.
Equity capital infusions came from investors in Japan, Singapore, and the US — countries or economies that BSP said implemented gradual easing of containment measures. The funds were invested in these sectors: manufacturing; financial and insurance; and real estate industries.
Reinvestment of earnings, in the meantime, dropped by 23.7 percent to $85 million from $111 million in May 2019.
The BSP said the net FDI inflows in May reduced the January to May decline to 25.6 percent compared to the decrease of 32.1 percent recorded in the January to April period. “Specifically, total placements in equity capital by May registered a growth of 4.8 percent from 4.4 percent in April,” said the BSP.
As of end-May, total equity capital withdrawals were lower compared to the same period in 2019. “The cumulative net investments in debt instruments in May, while lower by 46.4 percent year-on-year, eased from 53 percent in April. Total reinvestment of earnings declined by 22.2 percent year-on-year by May,” noted the BSP.
The January to May net investments in debt instruments amounted to only $1.28 billion compared to last year’s $2.4 billion, while equity capital placements increased by 4.8 percent to $842 million from $893 million. Reinvestment of earnings continue to drop to $353 million from $454 million.
The BSP has revised its 2020 net FDI forecast lower to $4.1 billion from its pre-pandemic $8.8 billion estimate. For 2021, the net FDI is expected to improve to $6.5 billion.