7-month FDI net inflows up at 43.1%

Published October 11, 2021, 3:40 PM

by Lee C. Chipongian

The central bank registered $5.56 billion of net foreign direct investment (FDI) inflows for the first seven months of 2021, up 43.1 percent compared with the same period last year of $3.88 billion on higher investments in debt instruments by non-residents.

The Bangko Sentral ng Pilipinas (BSP) statistics on FDI covers actual investment inflows and includes equity capital, reinvestment of earnings, and borrowings.

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According to the BSP, the cumulative FDI net inflows improved due to the 78.7 percent growth in non-residents’ net investments in debt instruments which reached $3.88 billion as of end-July from $2.17 billion same period in 2020, said the Bangko Sentral ng Pilipinas (BSP) on Monday, Oct. 11. As of end July, reinvestment of earnings also increased by 19.3 percent to $677 million versus $567 million last year.

The BSP data, however, showed that non-residents’ net investments in equity capital other than reinvestment of earnings, was down by 12.4 percent to $1 billion from $1.14 billion last year. The lower placements of $1.23 billion from $1.36 billion last year and the increase in withdrawals by six percent to $223 million also contributed to the decline in net investments in equity capital.

For the seven-month period, equity capital placements came from Singapore, Japan, and the US and these funds were invested in the following sectors: manufacturing; financial and insurance; and electricity, gas, steam, and air-conditioning industries.

For the month of July only, net FDI net inflows rose by 52 percent to $1.26 billion from $831 million same time in 2020.

The BSP said the increase in FDI net inflows in July was attributed to the 61.1 percent growth in investments in debt instruments to $1.1 billion from $667 million. The reinvestment of earnings also went up by 87.1 percent to $155 million from $83 million in 2020.

However, in July, the non-residents’ net investments in equity capital fell by 58.3 percent to $34 million from $81 million because of the increase in equity capital withdrawals.

Capital withdrawals rose by 634.7 percent to $57 million from $8 million. The BSP said this was more than offset by the increase in equity capital placements of 2.6 percent to $91 million.

A big portion of equity capital placements for the month of July came from investors in Japan, the US, and Hong Kong, and they invested in manufacturing, real estate and financial and insurance industries.

The BSP expects FDI net inflows to reach $7.8 billion by end 2021, up from the actual $6.54 billion net FDI in 2020.

 
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