Foreign direct investments (FDI) last year dropped 24.6 percent to a net inflow of $6.542 billion from $8.671 billion in 2019, but it was more than the Bangko Sentral ng Pilipinas’ (BSP) $6-billion projection for 2020.
“The disruptive impact of the pandemic on global supply chains and the weak business outlook adversely affected investor decisions in 2020,” said the BSP in a statement Wednesday.
FDIs, which are actual investment inflows, are in the form of equity capital, reinvestment of earnings and borrowings.
Last year, non-residents’ net investments in debt instruments fell by 22 percent year-on-year to $4.089 billion from $5.244 billion while its net equity capital investments also decreased by 35.7 percent to $1.476 billion from $2.295 billion. Net investments in debt instruments are mostly inter company borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines.
The BSP said equity capital placements or infusions from investors in Japan, the Netherlands, the US, and Singapore were invested in manufacturing, real estate, and financial and insurance industries.
Reinvestment of earnings last year declined by 13.6 percent to $978 million from $1.132 billion in 2019.
For the month December 2020 only, net FDI inflows fell by 62.6 percent to $509 million from $1.362 billion.
“The year-on-year decline in FDI in December was due mainly to base effects given significantly large inflows from net investments in equity capital and debt instruments in December 2019,” noted the BSP.
Non-residents’ net equity capital investments decreased by 89.8 percent in December to $78 million from $766 million same time in 2019. “This outcome stemmed mainly from the 87.8 percent contraction in equity capital placements to $97 million (from $800 million), which was tempered partly by the 42.9 percent drop in equity capital withdrawals to $20 million (from $34 million),” the BSP said.
Non-residents’ net investments in debt instruments, in the meantime, were also down by 31.1 percent to $360 million in December from $523 million previously, while reinvestment of earnings dipped by 2.6 percent to $71 million from $73 million.