Long term investments in PH dropped for second successive year in 2019

Foreign businessmen brought in less long-term equity investments to the Philippines in 2019, which the central bank attributed to global economic uncertainties that painted over any bullish sentiment on the country’s strong economic fundamentals.

In a press statement, the Bangko Sentral ng Pilipinas (BSP) said the country had $7.6 billion net inflow of foreign direct investments for the whole of 2019. This represented a 23.1-percent decrease from the $9.9 billion net inflow in 2018.

“Notwithstanding the country’s sound macroeconomic fundamentals, global uncertainties dampened investor sentiment during the year,” the BSP said.

Last year’s lower investment tally marks the second consecutive year of declines after the record high level of $10 billion in foreign  direct investments recorded in 2017, the first year of the Duterte administration.

Net investments in debt instruments fell slightly to $484 million from $486 million in 2018.

Reinvestment of earnings grew by 17.2 percent to $71 million in the same period.

The BSP data also showed that net investments in debt instruments dropped by 23.2 percent for the whole 2019 to $5.2 billion. Net equity capital investments declined by 38.2 percent to $1.4 billion.

Gross equity capital investments for the year — which originated mainly from Singapore, Japan and the United States — were channeled mostly to financing and insurance, real estate, electricity, gas, steam and air conditioning supply and manufacturing.

At least $1 billion in earnings were reinvested in 2019, the BSP said.

In December 2019 alone, foreign direct investment flow amounted to $1.2 billion, some 69 percent higher than $683 million in December 2018.

The BSP attributed this to “expansion in net equity capital investments” which reached $598 million or four times more than $136 million in 2018.

Net equity capital investments increased as equity capital placements rose to $626 million from $165 million.

Equity capital placements came mostly from Singapore, the Netherlands, Japan, and the United States.

These capital infusions were directed mainly to electricity, gas, steam and air conditioning supply and financial and insurance activities.

Edited by TSB