Net FDI down at $5.8B end-Nov. 2020

Published February 12, 2021, 7:20 AM

by Lee C. Chipongian

The country’s net foreign direct investment (FDI) inflows fell to $5.792 billion as of end-November 2020, 10.8 percent lower year-on-year from $6.493 billion, the Bangko Sentral ng Pilipinas (BSP) reported.

FDIs are equity capital, reinvestment of earnings, and borrowings. BSP’s FDI reporting includes investment by a non-resident direct investor in a resident enterprise with at least 10 percent, and investment made by a non-resident subsidiary/associate in its resident direct investor.

Photographer: Paul Yeung/Bloomberg file

Based on BSP data, non-residents’ net investments in debt instruments in the January-November period declined to $3.768 billion or 19.3 percent lower year-on-year while reinvestment of earnings fell by 21.9 percent to $760 million from $974 million. “By contrast, non-residents’ net investments in equity capital expanded by 48.6 percent to $1.3 billion (from $851 million), which partly eased the decline in the cumulative FDI net inflows,” according to the central bank.

In the meantime as of end-November, the BSP said equity capital placements inched up by 0.5 percent year-on-year to $1.529 billion while withdrawals dropped by 60.4 percent to $265 million.

These equity capital placements came from investors in Japan, the Netherlands, the US, and Singapore, and invested in sectors such as manufacturing, real estate, and financial and insurance industries.

For the month of November only, net FDIs were recorded at $537 million, down by 16.5 percent compared to same time in 2019 of $643 million.

The BSP noted that this “decline was slower compared to the 24.5 percent contraction posted in October 2020 amid news of positive developments in COVID-19 vaccines.” It said that the “recent contractions in net FDI inflows were largely affected by concerns over the resurgence of COVID-19 cases and re-imposition of quarantine measures in some advanced and emerging markets.”

For November, non-residents’ net investments in equity capital decreased by 57.3 percent year-on-year to $66 million. Equity capital placements declined by 44.8 percent to $96 million and this is coupled with a 57.3 percent increase in equity capital withdrawals to $30 million, said the BSP.

“The drop in total FDI net inflows was partially mitigated by the increase in non-residents’ net investments in debt instruments, which grew by 3.8 percent to $415 million from $400 million in the same period in 2019” while “reinvestment of earnings, however, fell by 36.5 percent to $56 million from $88 million in November 2019,” said the BSP.