Foreign direct investment fell 61.1% to $874 million in April – BSP

Bangko Sentral ng Pilipinas reports a bad news about foreign direct investment. INQUIRER FILE PHOTO

The net inflow of job-generating foreign direct investment fell 61.1 year-on-year to $874 million in April from the record-high amount posted a year ago, the latest Bangko Sentral ng Pilipinas data released Monday showed.

BSP data showed that the FDI last April was actually the biggest in 12 months.

However, the $2.244-billion net FDI inflow recorded in April last year was the highest-ever monthly figure, hence a high base.

As such, FDI generated during the first four months also slid 32 percent to $2.434 billion from $3.581 billion a year ago.

In a statement, the BSP nonetheless said the net inflow posted as of end-April was a result of “continued investor confidence in the country’s sound macroeconomic fundamentals.”

In April alone, all FDI components registered positive balances, the BSP said.

Gross equity capital placements reached $84 million last April, more than the $14 million in withdrawals. However, the net equity capital investments of $70 million that month plunged 91.6 percent from $825 million.

The BSP said these equity capital were mostly poured into the following sectors: electricity, gas, steam and air-conditioning supply; financial and insurance; human health and social work; manufacturing; and real estate.

Majority of the equity capital investments in April were sourced from France, Hong Kong, Japan, Singapore and the United States.

Meanwhile, investments in debt instruments, which are largely comprised of intercompany borrowings or lending between foreign direct investors and their local affiliates or subsidiaries, dropped 46.2 percent last April to $723 million from $1.345 billion a year ago.

On the other hand, reinvestment of earnings rose 9.3 percent to $81 million from $74 million.

From January to April, net equity other than reinvestment of earnings declined 87.6 percent to $170 million from $1.375 billion last year.

The four-month equity capital placements came from Germany, Hong Kong, Japan, Singapore and the US.

The industries that received the bulk of equity capital investments in the first four months were the following: electricity, gas, steam and air-conditioning supply; financial and insurance; manufacturing; real estate; as well as wholesale and retail trade.

Net investments in debt instruments rose 2 percent year-on-year to $1.989 billion, while reinvestment in earning grew by a faster 7.5 percent year-on-year to $274 million during the January to April period.

The BSP expects FDI to hit the $8-billion mark this year.

Last month, the BSP adjusted upward its FDI forecast for 2017 from $7 billion previously, as actual inflows last year reached a record $7.933 billion, up 40.7 percent from 2015’s $5.639 billion.

Zeno Ronald R. Abenoja, director at the BSP’s department of economic research, had said that the more rosy FDO forecast was due to the ”recovery of the manufacturing sector and sustained growth in the services sectors as well as the implementation of the PPP [public-private partnership] projects awarded in previous periods.“

“This is also in line with the expected improvement in global economic conditions relative to 2016. So the push-and-pull conditions are seen to be favorable in terms of the FDI inflows. These potential FDI are seen to be channeled to the following sectors: the manufacturing sectors particularly electronics and motor parts; utilities, including the renewable energy and waterworks; the real estate sector; entertainment; financial and insurance activities; and wholesale and retail trade,” according to Abenoja.