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FDI entry still sluggish as economic worries keep investors gun-shy

By: - Reporter / @daxinq
/ 04:59 PM December 10, 2019

Foreign direct investments continued their sluggish entry into the Philippines with September FDIs amounting to only $566 million, or 2.9 percent lower than $582 million in the same period in 2018, according to the Bangko Sentral ng Pilipinas (BSP).

In a statement, the BSP said this was mainly “due to the decline in nonresidents’ net investments in debt instruments.”

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But BSP pointed to the silver lining. It said from net outflow, equity capital investments registered a net inflow which “mitigated the decrease in net investments in debt instruments.”

Net investments in debt instruments, consisting mainly of inter-company borrowings or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines, decreased by 36 percent to $395 million from $618 million.

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But nonresidents’ net equity capital investments grew 182 percent to $96 million.

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

These investments were channeled mainly to financial and insurance, manufacturing, and real estate industries.

Reinvestment of earnings declined by 9.4 percent to $74 million from $82 million in the same month in 2018.

On a cumulative basis, FDIs for the first three quarters of 2019 posted net inflow of $5.1 billion, 36.9 percent lower than $8.1 billion in 2018.

The slowdown, according to the BSP, “reflected the adverse effects of prolonged trade disputes” mainly between the United States and China.

This prompted investors to “hold off their investment plans in emerging markets, including the Philippines, until global outlook improves,” said the BSP.

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Nonresidents who bought bonds and other debt papers spent less on these instruments, according to the BSP.

Purchase of debt instruments by nonresidents fell 32.6 percent to $3.7 billion from $5.5 billion.

Net equity capital investments decreased as placements dipped by 45.7 percent to $1.2 billion from $2.3 billion, while withdrawals increased by 58.7 percent to $607 million from $382 million.

Edited by TSB
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TAGS: BSP, capital, debt instruments, Investments
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