Rise in June long term investment inflows to PH narrows 6-month decline

MANILA, Philippines — Long term investment inflows into the country sustained their growth momentum in June, which authorities attributed to “the gradual reopening of advanced economies with investment interest in the Philippines.”

At the same time, the Bangko Sentral ng Pilipinas said the 7.1-percent increase in foreign direct investments June 2020 to $481 million from $449 million during the same period last year was also due to “the country’s sustained strong macroeconomic fundamentals despite the COVID-19 pandemic.”

The net inflows in the sixth month of the year further eased the cumulative contraction in long term investment to 18.3 percent in the first semester — to $3 billion from $3.7 billion — from a cumulative decline of 21.9 percent in the first five months of 2020.

All foreign direct investment components for January to June recorded improvements, led by net investments in equity capital, which registered a growth of 146.8 percent to $910 million, from a 117.1 percent cumulative growth by May.

Net investments in debt instruments and reinvestment of earnings posted lower declines of 39.8 percent (from a 41.3-percent contraction by May), to $1.7 billion and 21.7 percent (from a 22.2-percent decline by May) to $433 million, respectively.

The favorable performance in net investments in equity capital was attributed to the combined effects of an expansion in equity placements of 16.6 percent to $1 billion from $881 million, and a contraction in withdrawals of 77.1 percent to $117 million from $512 million.

Equity capital placements were sourced primarily from Japan, the Netherlands, Singapore, and the United States. These were infused mainly in manufacturing, real estate, financial and insurance, and administrative and support service industries.

For June alone, net equity capital investments expanded to $173 million from $29 million a year ago, following the 137.6 percent increase in equity capital placements to $185 million from $78 million, and the decline in withdrawals by 74.9 percent to $12 million from $49 million.

The bulk of the equity capital placements for the month originated from Japan, the United Kingdom, and the US. By economic activity, these placements were invested mainly in manufacturing, human health and social work, financial and insurance, and the real estate industries.

Meanwhile, net investments in debt instruments in June 2020 dropped by 28.8 percent to $229 million from $321 million in June 2019. Reinvestment of earnings was also lower by 19.4 percent at $80 million compared to $99 million a year ago.

The central bank’s definition of foreign direct investments includes investment by a non-resident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent, and investment made by a non-resident subsidiary/associate in its resident direct investor.  They can be in the form of equity capital, reinvestment of earnings, or borrowings.