Net FDI flow in May down 9.6% to $364M

Foreign direct investments continued to flow into the country in May, as funds continued to flow into the local real estate, manufacturing, and wholesale and retail trade sectors, the Bangko Sentral ng Pilipinas said Wednesday.

However, according to the BSP, net inflows during the fifth month of 2016 declined by 9.6 percent to $364 million, from $403 million in the same period last year.

The lower level of FDIs—defined as more permanent funds not meant for acquiring short term equity or debt securities—coincided with the Philippines’ presidential elections when both short- and long-term investors historically adopt a wait-and-see stance before committing more funds to certain markets.

Despite this, the BSP said all FDI components posted net inflows during the period.

In particular, debt instruments, consisting mainly of inter-company borrowing and lending between foreign direct investors and their local subsidiaries or affiliates, posted net inflows of $220 million. This was higher by 15.4 percent from $191 million for the same period last year.

Net equity capital also recorded net inflows of $79 million, as equity capital placements of $86 million more than offset withdrawals of $8 million.

“The bulk of equity capital placements during the same period came from Thailand, the United States, Hong Kong, Germany and Singapore,” BSP said. “These capital infusions were channeled mainly to real estate; manufacturing; wholesale and retail trade; and electricity, gas, steam and air conditioning activities.”

In the meantime, reinvestment of earnings amounted to $65 million during the month.

On a cumulative basis, FDI net inflows more than doubled to $3.9 billion in the first five months from $1.6 billion a year ago, as all FDI components registered increases in their net inflows.

“Specifically, debt instruments, which contributed largely to the increase in FDI during the period, grew by 143.7 percent to $2.1 billion from $878 million,” the BSP said.

Net inflows of equity capital also increased by more than threefold to $1.4 billion from $440 million.

“Investor sentiment was buoyed by the country’s sound macroeconomic fundamentals and its non-inflationary GDP (representing the combination of low inflation and high growth), as well as positive growth prospects for the Philippine economy,” BSP added.

Fresh equity capital infusions amounted to $1.5 billion,  more than the withdrawals of $125 million.

Equity capital placements during the period came largely from Japan, Hong Kong, Singapore, the United States and Taiwan.

These were invested mainly in financial and insurance; real estate; manufacturing; construction, and accommodation and food service activities. Reinvestment of earnings hit $321 million.