The net inflow of job-creating foreign direct investments (FDIs) in the first seven months continued to fall behind year-ago levels, falling 16.5 percent to $3.9 billion, the latest Bangko Sentral ng Pilipinas data released yesterday showed.
In July alone, FDIs declined by a faster 37.9 percent to $307 million from $493 million in the same month last year, reversing the 182.7-percent year-on-year jump posted in June.
“This was mainly on account of the decline in investments in debt instruments to $105 million from $407 million, which outweighed the more than five-fold increase in net equity capital. The surge in net equity capital to $131 million was due mainly to the increase in equity capital placements to $170 million, which more than compensated for the withdrawals of $39 million,” the BSP said in explaining the July figure.
The drop in end-July FDIs from a year ago’s $4.68 billion was attributed by the BSP to lower inflows of net equity capital—at $272 million at the end of the first seven months, down from last year’s $1.5 billion.
The July FDI figure was the lowest monthly inflow in 13 months, or since June last year’s $238 million.
Also, the $2.24-billion net FDI inflow registered in April last year was the biggest-ever monthly figure, hence there was a high base from 2016.
In a statement yesterday, the state planning agency National Economic and Development Authority claimed that despite the lower year-to-date FDI inflows, “foreign investors remain confident to do business in the Philippines.”
Presidential adviser for entrepreneurship Joey Concepcion also downplayed the dip in foreign direct investments in the country, saying it takes some time for pledges from overseas businesses to get moving.
At the same time, Concepcion said businesses that were in the Philippines continued to be confident in the present administration, despite the recent two-digit decline in President Duterte’s trust and satisfaction ratings.
“I guess despite the ratings of our President which is slightly down, what really is important is that the business community is solidly behind the President,” he said in a palace press briefing yesterday. “As you can see, our stock market a couple of days ago, for a while hit all-time high. And if there is no business confidence, then you won’t see the stock market making a new high.”
“The way I look at it is, [it’s] a matter of timing. I don’t know what areas are down, but it’s a matter of timing. Maybe some of their plans are delayed or whatever. The commitments that are made during the foreign trips may take some time to materialize,” Concepcion said.
These businesses may need to complete some studies first before actually coming to the Philippines, he said.
Malacañang earlier said Mr. Duterte’s travels abroad had netted $37.8 billion in grants, loans, investment pledges and private business-to-business deals. The government spent at least half a billion pesos for 19 of the President’s 21 foreign visits.
Concepcion also acknowledged that there were “concerns” that affect the entry of investors from abroad.
The Philippines has been getting international attention because of the killings that have marked the administration’s war on drugs. The United Nations, the European Union and other countries have expressed concern about the situation.