FDI inflow plunged 55% in August
Foreign direct investments came in at a net inflow of $50 million in August, a decrease of 55 percent year on year due to investors’ aversion to risks arising from the worldwide economic slump.
Even then, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said in a statement that positive balances remained due to the country’s “solid economic fundamentals.”
Tetangco said the FDI balance in August came largely from equity capital and reinvested earnings.
This put the net FDI inflows in the eight months to August at $810 million—19.2 percent less than the $1 billion posted in the same period a year ago.
The decline was observed at a time of financial strains arising from the sovereign debt crisis in the euro zone and the sluggish growth now upsetting the US economy.
Capital other than equity and reinvested earnings showed a 51.3-percent drop, settling at a net inflow of $272 million, from the $558 million seen in the same period last year.
This consists mainly of inter-company borrowing and lending between foreign director investors and their subsidiaries or affiliates in the Philippines.
Tetangco further explained that the decline was largely due to trade credits extended by affiliates abroad.
“Moderating the impact of the decrease in the other capital account were the higher net equity capital inflows and reinvested earnings for the first eight months of 2011,” the BSP chief said.
Net equity capital inflows expanded by 25.6 percent to $278 million while reinvestment earnings grew by 17.3 percent to $260 million.
“The country’s resilience amid the persisting global economic uncertainties” encouraged the growth in reinvested earnings, Tetangco said.
On the other hand, growth in net equity capital inflows was affected by a 21-percent drop in gross equity placements, which slid to $326 million from $412 million.
Inflows to equity investments came mostly from the United States, Japan, Hong Kong, South Korea and Singapore.
Bulk of these funds had been plowed into real estate, manufacturing, mining and quarrying, utilities, and wholesale and retail trade sectors.
