FDI net inflows up for four straight months in August

November 11, 2020

Foreign direct investment (FDI) net inflows continued its growth momentum in August , recording a 46.9 percent expansion year-on-year to $637 million from $434 million in August 2019, the Bangko Sentral ng Pilipinas (BSP) said Tuesday.

FDI net inflows increased for the fourth consecutive month, owing to investors’ renewed confidence as the National Government’s fiscal stimulus and BSP’s accommodative monetary policy stance to mitigate the impact of COVID-19 pandemic gained traction along with the easing of quarantine measures in the country.

The growth in FDI net inflows during the month was largely on account of the 72.2 percent growth in net investments in debt instruments, which amounted to  $459 million from $267 million in the comparable month last year.

Likewise, net equity capital investments rose by 32.9 percent to $107 million during the review period from $81 million a year ago as the growth in equity capital placements (30.1 percent to $118 million) more than offset that of withdrawals (7.1 percent to $10 million).

Bulk of the equity capital placements during the month originated from Japan, the United States, and the British Virgin Islands.

These were invested mainly in manufacturing, real estate,  financial and insurance, and professional, scientific, and technical industries.

Reinvestment of earnings declined by 17.9 percent to $71 million in August  from $86 million last year.

On a cumulative basis, FDI net inflows contracted by 5.6 percent to $4.4 billion in January to August  as compared to the $4.7 billion net inflows in the same period last year.

The four consecutive months of growth since May resulted in the considerable narrowing of the cumulative net FDI contraction of 27.9 percent in April.

The lower cumulative net FDI contraction of 5.6 percent can be generally attributed to net inflows in equity capital investments (other than reinvested earnings) and debt instruments for the period May to August.

By component, equity capital placements increased by 8.1 percent to $1.2 billion (from $1.1 billion), while withdrawals dipped by 77.1 percent to $136 million (from $591 million).

Equity capital placements during the period came mostly from Japan, the Netherlands, the United States, and Singapore.

Investments were channeled largely to manufacturing, real estate,  financial and insurance, administrative and support service, and wholesale and retail trade industries.

Cumulative net investments in debt instruments and reinvestment of earnings also improved, posting lower declines of 19.3 percent (from 47.3 percent by April) to  $2.8 billion and 20.6 percent (from 22.2 percent by May) to $577 million, respectively.