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Philippines: FDI inflow falls 30% in 11 months
MANILA, Philippines — Net inflow of long-term investments into the Philippines climbed in November, but was not enough to offset the strong outflow during the 11-month period last year as investor confidence remained muted due to uncertainty brought about by the dim global economic outlook and delayed passage of the second tranche of the government’s tax reform program.
Based on a report from the Bangko Sentral ng PIlipinas (BSP), the net inflow of foreign direct investments (FDI) increased by 14.6 percent to $623 million in November last year from $543 million in the same month in 2018.
“This was due mainly to the increases posted in all FDI components,” the BSP said.
Equity infusions went up by 17 percent to $174 million in November last year from $149 million in the same month in 2018, while withdrawals surged by 66 percent to $19 million from $11 million.
The BSP said equity capital placements were sourced mainly from the US, Thailand, Japan, and South Korea. The infusions were channeled to financial and insurance as well as real estate.
Reinvestment of earnings jumped by 35.1 percent to $88 million from $65 million, while non-residents’ investments in debt instruments consisting mainly of loans extended by parent companies abroad to their local affiliates increased by 11.4 percent to $380 million from $341 million.
From January to November, the BSP said net inflow of FDI fell by nearly 30 percent to $6.41 billion compared to $9.15 billion recorded in the same period in 2018.
“Concerns over the global economic outlook continued to
curb FDI as investor confidence remained muted,” the BSP said.
Equity placements fell by 41.3 percent to $1.49 billion from January to November last year from $2.54 billion in 2018, while pull out of capital surged by 59 percent to $648 million from $407 million.
Capital placements from Japan, the US, Singapore, China, and South Korea were made in financial and insurance, real estate as well as manufacturing.
Reinvestment of earnings went up by 14.4 percent to $913 million from $798 million, while debt instruments fell by 25.2 percent to $4.65 billion from $6.22 billion.
The BSP has lowered the projected net FDI inflows to $6.8 billion for 2019.
For this year, the central bank sees net FDI inflows recovering to $8.8 billion.
However, BSP Governor Benjamin Diokno said earlier the net FDI inflow could exceed initial estimates and hit over $10 billion if the Corporate Income Tax and Incentives and Rationalization Act (CITIRA) is implemented.
“Our estimate right now is around $8 billion, but that’s early in the game and once CITIRA is approved, it (FDIs) could exceed $10 billion,” Diokno said.
Source: https://www.philstar.com/business/2020/02/11/1992031/fdi-inflow-falls-30-11-months