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Foreign investments shrink


12:51 AM November 13th, 2012

By: Michelle V. Remo, November 13th, 2012 12:51 AM

Net inflow of foreign direct investments fell in August as global economic problems dampened investor appetite for new businesses, the Bangko Sentral ng Pilipinas reported Monday.

Net FDI inflow reached $13 million in August, down nearly 83 percent from $76 million in the same month last year. The amount was also 88 percent lower than the $108 million in July.

The month-on-month drop indicated volatility in the sentiment of investors due to changing expectations over the ability of advanced economies to resolve their problems and lift the growth of the global economy, officials said.

“[The drop in net FDIs] reflected investors’ relatively cautious stance due to weak global economic prospects and financial strains in the advanced economies,” the BSP said in a statement.

The country’s performance in attracting investments in August brought the total net FDIs for the first eight months of the year to $1.04 billion, which was nonetheless up 61 percent from $644 million in the same month last year.

Officials said the increase in the first eight months, which was due to favorable investment appetite in the months prior to August, was an indication that the outlook of foreign businesses on the Philippines remained positive. Such investment appetite, however, was being dampened by global economic problems, they said.

The sectors that benefited most from the FDIs in the first eight months were manufacturing, real estate, wholesale and retail trade, financial and insurance, and mining and quarrying.

The investments came mostly from the United States, Australia, Netherlands, United Kingdom, Japan and Bermuda.

The BSP said there was a likelihood for investments to increase soon, especially once the country gets an investment grade from any of the three major international credit-rating agencies.

All agencies—Moody’s Investors Service, Standard & Poor’s and Fitch Ratings—rate the Philippines one notch below investment grade.

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