Virus infects FDI in April

The slowdown in FDI inflows reflected the continued weak global and domestic demand prospects

Despite posting a net inflow for April, the country’s foreign direct investments (FDI) registered at a much lower level compared to where it was last year.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that FDI as of end-April 2020 were at $311 million, a sharp 67.9 percent drop from the recorded $971 million net inflows in the same month in 2019.

“The slowdown in FDI inflows reflected the continued weak global and domestic demand prospects prompting many investors to put on hold investment plans amid the unresolved COVID-19 (coronavirus disease) pandemic,” the BSP explained.

The BSP revised its FDI assumption for the year, slashing its previous $8.8 billion goal by more than half to just $4.1 billion.

Debt, equities infusions fall

Still, the central bank attributed the decline in FDI for the month from lower net investments in debt instruments and equity capital which dipped by 73.2 and 82.6 percent respectively.

Equity capital placements in April also showed a 68.3 percent contraction year-on-year from $147 million to just $47 million.

By country source, equity capital placements came primarily from Japan, the US, Singapore and Germany. These were heavily invested in manufacturing, wholesale and retail trade and real estate industries.

4-month tally down 32%

On a cumulative basis, FDI net inflows for the four months of the year was lower by 32.1 percent with only $2 billion compared to the listed $2.9 billion in the same period year-ago.

The decline in FDI for January to April 2020 was owed largely to the 53 percent year-on-year decline in net investments in debt instruments from $2.2 billion to just $1.1 billion along with the 21.7 percent contraction in reinvestment of earnings during the period.