FDIs rebound in February with net inflow of $893M
MANILA—Foreigndirect investments to the Philippines showed improvements in February after the Omicron onslaught waned, although many investors are still on the edge amid lingering economic uncertainties that the next president would have to clear up.
WHAT’S NEW
Data from the Bangko Sentral ng Pilipinas revealed FDIs posted a net inflow of $893 million in February, expanding 46.3% year-on-year.A net inflow means more FDIs entered the country against those that left.
On a monthly basis, FDI inched up 9.03%.
WHY THIS MATTERS
Unlike the so-called “hot money” which enters and leaves markets with ease, FDIs are firmer commitments that provide jobs for Filipinos, so the government wants to attract more FDIs and not only keep existing ones.
For this year, the central bank projects a full-year haul of $11 billion net inflow, higher than the actual $10.5 billion net inflow recorded last year.
WHAT AN ANALYST SAYS
Sought for comment, Nicholas Mapa, senior economist at ING Bank in Manila, said that while the latest FDI figures “reflect improving sentiment”, many investors could be having second thoughts about making new investments in the country.
Data showed that in the first two months of the year, equity capital placements, a measure of new FDIs, plunged 49.4% year-on-year to $234 million.
Meanwhile, much of the inflows in February came from intercompany borrowings between multinational companies and their local offices, which expanded 40.8% year-on-year to $722 million.
Reinvestment of earnings slid down 1.0% on-year to $152 million during the month.
“Just as in January, the bulk of FDI was in debt instruments while equity and reinvestment of earnings was actually negative. This suggests that although there have been improvements with regard to outlook, most investors are still on the fence on whether to put in more substantial investments into the country,” Mapa said.