Net FDI flows reach $1.2 B in first 2 months

The central bank reported yesterday that for the first two months, net foreign direct investments (FDI) inflows amounted to $1.2 billion, down 12.2 percent from $1.3 billion same time in 2019.

The Bangko Sentral ng Pilipinas (BSP) said net FDI inflows declined due to a 44.1 percent drop in net investments in debt instruments from $984 million to $550 million while reinvestment of earnings also dropped by 16 percent from $156 million to $131 million.

For the month of February only, net FDI reached $505 million, 31.5 percent lower compared to $737 million same time in 2019.

FDIs are not only equity capital and reinvestment of earnings, but are also borrowings.

According to the BSP, “FDI declined as uncertainties on the impact of the COVID-19 outbreak dampened investor sentiment.”

In February, there was a 26.4 percent decrease in net investments in debt instruments to $317 million from $431 million. Net placements of equity capital also dropped to $129 million or 43 percent yearon-year from $227 million.

“Bulk of the equity capital placements during the period were sourced from Singapore, Japan, and the US,” the BSP said. “These investments were channeled mainly to manufacturing, real estate, and wholesale and retail trade industries.”

In the meantime, some $59million reinvestment of earnings were registered during the month but this was lower compared to $80 million in February last year.

The BSP said the January to February FDI and its decline was “tempered by the 162 percent increase in net equity capital placements to $481 million from $184 million.”

For the first two months, the equity capital placements came mostly from investors in the Netherlands, Singapore, Japan, and the US, and these were also invested in manufacturing, real estate, and wholesale and retail trade industries, said the BSP.

State-run Philippine Amusement and Gaming Corp. (Pagcor) is hopeful that offshore gaming companies could be fully allowed by the government to resume their operations within this month.

While President Duterte already gave a green light to the industry, Andrea D. Domingo, Pagcor chair and chief executive, said that Philippine offshore gaming operators (POGOs) remain closed, pending clearance from all regulators, including the tax agency.

“We hope to be able to resume, really, POGOs operations in June,” Domingo said at the ICE Asia Digital 2020 forum.

She said POGOs already settled their withholding taxes with the Bureau of Internal Revenue (BIR) and paid Pagcor’s minimum guarantee fee of ₱350 million.

“When the President approved their assumption of their operations, on their own they [also] volunteered to pay in full all the salaries of the Filipinos who did not work in April,” Domingo said.

To recall, BIR said that no

POGOs nor any of their service providers as of May had fully paid their mandatory tax obligations, a prerequisite to be allowed to restart operations.

But despite an almost threemonth hiatus, Domingo said that she remains optimistic that Pagcor could still generate around ₱2.5 billion to ₱3-billion revenues from POGOs in second-semester of the year.

She also said that they want to integrate and harmonize all of the laws, rules and regulations that other government agencies are imposing on POGO operators.