FDIs down 5.6% end August

The central bank-registered foreign direct investments (FDI) totalled $4.432 billion as of end-August, 5.6 percent down from same time in 2019 of $4.693 billion.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno

FDIs, which are equity capital, reinvestment of earnings and borrowings, for the month of August alone amounted to $637 million, 46.9 percent higher than the $434 million in August 2019.

On a cumulative basis, there have been four consecutive months of growth since May that the Bangko Sentral ng Pilipinas (BSP) noted has considerably narrowed the cumulative net FDI contraction of 27.9 percent reported last April.

“The FDI net inflows increased for the fourth consecutive month (August) owing to investors’ renewed confidence as the National Government’s fiscal stimulus and BSP’s accommodative monetary policy stance to mitigate the impact of COVID-19 pandemic gained traction along with the easing of quarantine measures in the country,” the BSP said.

The August net FDI inflows was higher mainly due to the 72.2 percent growth in net investments in debt instruments of $459 million from $267 million same time in 2019.

The net equity capital investments also increased by 32.9 percent to $107 million from $81 million last year as the 30.1 percent growth in equity capital placements more than offset the withdrawals which increased by 7.1 percent.

The top sources of equity capital placements by country are Japan, US, and the British Virgin Islands. These funds were invested in the following sectors: manufacturing; real estate; financial and insurance; and professional, scientific, and technical industries.

In the meantime the reinvestment of earnings decreased by 17.9 percent year-on-year to $71 million in August from $86 million in 2019.

For the January-August period, equity capital placements increased by 8.1 percent to $1.234 billion from $1.141 billion same period in 2019, while withdrawals declined by 77.1 percent to $136 million from $591 million.

Equity capital placements came from investors in Japan, the Netherlands, the US, and Singapore, and these were invested in these sectors: manufacturing; real estate; financial and insurance; administrative and support service; and wholesale and retail trade industries.

The end-August net investments in debt instruments and reinvestment of earnings also decreased by 19.3 percent and 20.6 percent year-on-year to $2.756 billion and $577 million, respectively.

Last month, the BSP revised its 2020 FDI projection higher to $5.6 billion from its previous forecast of $4.16 billion. Next year, the BSP forecasts net FDI of $7 billion based on global and local projections that economies will start recovering from the pandemic.