By Lee C. Chipongian
Central bank-monitored foreign direct investment (FDI) net inflows declined by a significant 38.8 percent as of end-June to $3.6 billion compared to $5.8 billion same time in 2018.
The Bangko Sentral ng Pilipinas (BSP) registered FDIs cover actual investment inflows as equity capital, reinvestment of earnings, and borrowings between affiliates.
In the first six months, the data on net inflows dropped as net equity capital investments fell to $361 million from $1.6 billion end-June 2018 as placements declined by 50.8 percent to $860 million from $1.7 billion. The BSP also said withdrawals went up by 206.6 percent year-on-year to $499 million from $163 million.
“Equity capital placements during the period were sourced largely from Japan, the US, Singapore, China and South Korea,” noted the BSP. These placements were invested in the following sectors: financial and insurance; real estate; manufacturing; transportation and storage, and administrative and support service.
The central bank also recorded lower net investments in debt instruments at to $2.7 billion from $3.8 billion). As for reinvestment of earnings, this increased by 12.1 percent to $507 million from $453 million last year.
For the month of June only, net FDI inflows totaled $430 million, also 48.5 percent lower than same time last year of $836 million net inflows.
According to the BSP, “non-residents’ investments in debt instruments (or lending by foreign companies abroad to their local affiliates to fund existing operations and business expansion) registered lower net inflows of $317 million from $570 million.”
For the month of June, net investment in equity capital was down to $25 million from $184 million in June 2018.
Singapore, the US, Japan, the Netherlands and China were the source of June-registered equity capital placements and these were invested in these sectors: real estate; manufacturing; financial and insurance; electricity, gas, steam and air conditioning supply; and transportation and storage industries.
Reinvestment of earnings of $89 million is 8.3 percent more than $82 billion same time in 2018.
BSP Governor Benjamin E. Diokno said earlier that FDI growth for 2019 “could be higher” than the BSP projection of $9 billion.
Diokno said FDI flow in the Philippines was increasing despite a global trend of a slowdown in FDI movement.
Last year, net FDI amounted to $9.8 billion. The BSP’s previous projection for net FDI was $10.2 billion for 2019 but it was downgraded due to the volatile global economy and markets.