Foreign investments continue to weaken

The entry of long-term capital into the Philippines continued to slow down in June, marking the fourth consecutive month of weaker investment inflows since the start of the year that was interrupted only by a slight uptick in February.

According to the Bangko Sentral ng Pilipinas, foreign direct investments (FDI) registered a net inflow of $430 million in June 2019, representing a 48.5-percent decline from the $836 million in net inflow posted in the same period last year.

Nonresidents’ investments in debt instruments, or lending by foreign companies abroad to their local affiliates to fund existing operations and business expansion, registered a lower net inflow of $317 million from $570 million. Likewise, nonresidents’ net investments in equity capital decreased to $25 million from $184 million.

Equity capital placements in July came mostly from Singapore, the United States, Japan, the Netherlands and China. These investments were channeled mainly to real estate; manufacturing; financial and insurance; electricity, gas, steam and air conditioning supply, and transportation and storage industries.

Reinvestment of earnings expanded by 8.3 percent to $89 million from $82 million in the same month last year.

For the first six months of 2019, net inflow of FDIs totaled $3.6 billion, or 38.8-percent lower than the $5.8-billion net inflow recorded in the first semester of last year.

“This resulted as net equity capital investments declined to $361 million from $1.6 billion as placements dipped by 50.8 percent to $860 million from $1.7 billion, and withdrawals increased by 206.6 percent to $499 million from $163 million,” the central bank said in a statement.

Equity capital placements during the period were sourced largely from Japan, the United States, Singapore, China and South Korea.

The industries that benefited from these capital infusions were financial and insurance; real estate; manufacturing; transportation and storage; and administrative and support services.

In addition, lower net investments in debt instruments were recorded at $2.7 billion from $3.8 billion. Meanwhile, reinvestment of earnings increased by 12.1 percent to $507 million from $453 million in the first semester of 2018.