The Bangko Sentral ng Pilipinas (BSP) registered $4.298 billion of net foreign direct investment (FDI) inflows at the end of June, up by 40.7 percent year-on-year or from $3.055 billion, mainly due to investments in debt instruments.
For the month of June only, net FDI inflows went up by 60.4 percent year-on-year to $833 million or from $519 million.
FDIs are in the form of equity capital, reinvestment of earnings, and borrowings. The BSP noted that the 86.5 percent growth in non-residents’ net investments in debt instruments contributed to the cumulative FDI increase. For the first six months, net investments in securities amounted to $2.805 billion, higher than $1.504 billion same time in 2020.
Reinvestment of earnings also increased by 7.7 percent to $522 million as of end-June compared to $484 million same time last year.
Net investments in equity capital however decreased by 8.9 percent to $971 million from $1.066 billion. The BSP said net investments in equity capital declined because of lower placements amounting to $1.137 billion during the period, down by 10.4 percent from $1.268 billioni in 2020.
Equity capital came from investors in Singapore, Japan, and the US. These funds were invested in these sectors: manufacturing; financial and insurance; and electricity, gas, steam, and air-conditioning industries.
As of end-June, equity capital withdrawals dropped by 18.3 percent to $165 million from $202 million.
For the month of June, the BSP said foreign direct investors infused capital to their subsidiaries and affiliates in the Philippines. These were investments in debt instruments, which rose year-on-year by 151.8 percent to $630 million in June.
Reinvestment of earnings also went up by 23.4 percent year-on-year in June to $110 million or from $89 million. Non-residents’ net investments in equity capital however dropped by 48.4 percent to $93 million in June.
The BSP attributed the decline in non-residents’ net investments to a 38.2 percent drop in equity capital placements which amounted to $119 million compared to $192 million in 2020. In the meantime, equity capital withdrawals increased by 112 percent to $26 million from $12 million in 2020.
According to the BSP, “concerns over the spread of more transmissible Delta variant may have prompted investors to remain on the sidelines.”
For the full-year, the BSP expects FDI net inflows to reach $7.8 billion. FDIs amounted to $6.54 billion in 2020, down by 24.6 percent compared to $8.67 billion in 2019.