FDIs post 39.7% decline in August

The country’s net foreign direct investments (FDIs) fell 39.7 percent year-on-year to $4.53 billion as of end-August from $7.53 billion, the Bangko Sentral ng Pilipinas (BSP) said yesterday.

For the month of August alone, net FDI inflows was down by 45.1 percent to $416 million from same time last year of $758 million.

According to the BSP, the weak global growth outlook has sidelined investors during the period. “(The) ongoing uncertainty in the global environment continued to dampen investor sentiment, which caused postponements in investment plans,” it said.

For the first eight months, non-residents' net investments in debt instruments declined by 32.5 percent to $3.3 billion or from $4.9 billion same time last year, while equity capital recorded a bigger decline of 73.4 percent to $536 million from $2 billion. Investments in debt instruments are mainly intercompany borrowings/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines.

Net equity capital investments also decreased from January to August by 49.6 percent to $1.1 billion compared to $2.2 billion same time in 2018 and this was “coupled with the 195.6 percent increase in withdrawals to $578 million (from $196 million),” noted the BSP.

Equity capital placements were made by investors from Japan, the US, Singapore, China, and South Korea. These capital were invested in these sectors: Financial and insurance; real estate; manufacturing; transportation and storage; and administrative and support service.

The BSP said reinvestment of earnings, in the meantime increased by 15.6 percent to $671 million as of end-August, compared to $581 million last year.

For the month of August only, FDl net inflows were mostly investments in debt instruments of $263 million which was down by 50.8 percent year-on-year or from $534 million.

Non-residents' net equity capital investments also decreased by 55.3 percent to $77 million $172 million as the “decline in placements (from $187 million to $86 million) outweighed the decrease in withdrawals (from $16 million to $10 million),” said the BSP.

Equity capital placements from investors in Japan, the US, Hong Kong, Cayman Islands, and Singapore, were made in: manufacturing; real estate; financial and insurance; information and communication; and wholesale and retail trade industries.

The BSP said reinvestment of earnings in August was up by 46 percent to $77 million from $53 million in August 2018.