Foreign investments poured into PH in Jan, up by 41.5%, says BSP

The flow of long term capital between the Philippines and the rest of the world reversed for the better in the first month of 2021 after a sharp drop last year caused by the COVID-19 pandemic, according to the central bank.

In a statement, the Bangko Sentral ng Pilipinas said foreign direct investment net inflows grew by 41.5 percent to reach $961 million in January 2021 from $679 million in January 2020.

The increase in these inflows during the month—which came in the form of equity capital, reinvestment of earnings or long term borrowings—was supported mainly by the 116-percent expansion in nonresidents’ net investment in debt instruments to $535 million from $248 million in the same month last year.

“This development reflects the investors’ optimism at the start of the year due in turn to the gradual reopening of the economy under the ‘new normal’ condition, easing of lockdown measures, and positive news about the rollout of COVID-19 vaccines,” the central bank said.

Contraction

In contrast, foreign direct investments in 2020 amounted to $6.5 billion, which represented a contraction of 24.6 percent from the $8.7 billion net inflows in 2019.

For December 2020 alone, foreign direct investments registered $509 million in net inflows, 62.6 percent lower than the $1.4 billion net inflows recorded in the same period of 2019.

For January 2021, nonresidents’ net investment in equity capital increased marginally by 0.5 percent to $351 million from $350 million in January 2020.

New placements

This resulted following continued inflows from new placements, amounting to $362 million in January 2021 from $374 million last year, coupled with lower withdrawals of $10 million in January 2021 from $24 million in January 2020.

Equity capital placements during the period emanated largely from Singapore, Japan and the Netherlands and were channelled mostly to financial and insurance; manufacturing; and professional, scientific, and technical industries.

Meanwhile, reinvestment of earnings declined by 9.2 percent to $74 million from $82 million in January 2020.

The BSP tally of foreign direct investments includes those from nonresident direct investors in a resident enterprises whose equity capital in the latter is at least 10 percent and investments made by nonresident subsidiaries or associates in resident direct investors.

These investment statistics are distinct from the investment data of other government sources in that BSP data covers actual investment inflows, while the approved foreign investments data that are published by the Philippine Statistics Authority represent investment commitments, which may not necessarily be realized fully, in a given period.