FDI net inflows climb to $2.38B end-March

Published June 10, 2021, 2:08 PM

by Lee C. Chipongian

The country’s foreign direct investments (FDI) net inflows increased by 45.1 percent year-on-year as of end-March to $2.377 billion from $1.638 billion, based on Bangko Sentral ng Pilipinas’ (BSP) latest data.

For the month of March alone, FDI net inflows which are equity capital, reinvestment of earnings, and borrowings, grew by 139.5 percent year-on-year to $808 million from $337 million.

“The favorable performance in March brought the cumulative FDI net inflows (to $2.377 billion) and the increase in FDI was mainly due to the 113.2 percent growth in non-residents’ net investments in debt instruments,” said the BSP. This totalled $1.431 billion for the first three months compared to $671 million same time in 2020.

Also for the first three months, the reinvestment of earnings went up by 5.4 percent to $225 million from $213 million last year. According to the BSP, the increase was due to “improved investor sentiment amid the gradual resumption of domestic activities, while adhering to the minimum health standards, and government efforts to accelerate the vaccination program.”

FDI net inflows in March alone expanded due to the substantial increase in non-residents’ net investments in debt instruments to $380 million from $45 million in the comparable month last year, the BSP noted.

For the month of March only, non-residents’ net investments in equity capital, in the meantime, increased by 52.8 percent to $349 million from $229 million same time in 2020. The improvement resulted from the 35.9 percent growth in equity capital placements which reached $377 million in March, while withdrawals decreased by 42.6 percent to $28 million.

The BSP said bulk of equity capital placements came from investors located in Singapore, Japan, and the US. These investments were invested in these sectors: electricity, gas, steam, and air-conditioning; and manufacturing industries.

Reinvestment of earnings for March grew by 23.3 percent to US$79 million from US$64 million last year.

In the meantime, the BSP said the end-March growth in net investments in equity capital reduced the year-to-date contraction to 4.3 percent from 29.1 percent in February, bringing the level to $721 million.

For the first three months of 2021, equity capital placements amounted to $828 million while equity withdrawals reached $107 million, said the BSP.

“Equity capital placements during the (first) quarter were sourced largely from Singapore, Japan, the US, and the Netherlands. These were invested primarily to the (following sectors): electricity, gas, steam, and air-conditioning; financial and insurance; and manufacturing industries.

The BSP is projecting FDI net inflows to reach $7.8 billion by end-2021. In 2020, the first pandemic year, FDI net inflows fell by 24.6 percent $6.54 billion from $8.67 billion in 2019.