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Philippines: FDI inflows contract in 5 months
MANILA, Philippines — The net inflow of foreign direct investments (FDIs) contracted by nearly 26 percent to $2.38 billion in the first five months from $3.19 billion in the same period last year despite the strong recovery in May, according to the Bangko Sentral ng Pilipinas.
The BSP attributed the lower inflow to the grim global outlook and weak investor confidence amid the COVID-19 pandemic.
Preliminary data released by the BSP also showed a 46.4 percent drop in debt instruments consisting mainly of loans extended by parent companies abroad to their local affiliates, to $1.29 billion from January to May compared to $2.4 billion in the same period last year.
Likewise, reinvestment of earnings fell by 22.2 percent to $353 million from January to May compared to last year’s $454 million.
The drop erased the doubling of equity capital to $738 million in the first five months from $339 million a year ago.
Equity placements coming mainly from the Netherlands, Japan and Singapore inched up by 4.8 percent to $842 million from January to May compared to last year’s $803 million. These were channeled to manufacturing, real estate, as well as administrative and support services.
On the other hand, withdrawals fell by 77.7 percent to $103 million from $464 million.
For May alone, net inflow of FDIs jumped by 42.4 percent to $399 million from $280 million in the same month last year, ending three consecutive months of decline.
“The double-digit growth in FDI net inflows in May reduced the cumulative decline in the January to May period to 25.6 percent from a contraction of 32.1 percent posted in the first four months,” the BSP said in a statement.
The BSP said the positive growth booked in May represents a reversal from February to April that saw declines in net FDI inflows due largely to the weak global outlook and investors’ confidence following the pandemic
The central bank attributed the sharp rise in FDIs in May to the 40.8 percent surge in debt instruments to $236 million from $168 million a year ago.
The BSP also cited the 44.8 percent jump in equity and investment fund shares to $162 million from $112 million.
Equity placements inched up by 8.1 percent to $80 million in May from $74 million in the same month last year, while withdrawals plunged by 96 percent to $3 million from $73 million.
“The stronger FDI performance during the month relative to the level last year was on account of the increase in nonresidents’ net investments in equity capital and debt instruments,” the BSP said.
On the other hand, reinvestment of earnings fell by 23.7 percent to $85 million from $111 million.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said FDI inflow is starting to pick up as the disruption in logistics locally and worldwide started to ease in the latter part of May.
“FDIs could further pick up in the coming months with the further reopening of economies locally and worldwide well into June onwards,” Ricafort said.
Source: https://www.philstar.com/business/2020/09/03/2039773/fdi-inflows-contract-5-months