Bangko Sentral ng Pilipinas. (File photo / Philippine Daily Inquirer)
The net inflow of foreign direct investments (FDI) into the Philippines decreased for the third straight month to $460 million in July, a 64-percent drop from $1.3 billion in the same month last year.
Net inflows have been receding month after month since recording at $989 million in April.
The July readout brought the seven-month or January to July figure to a net inflow of $5.1 billion, down 12 percent from $5.8 billion in the same period last year.
Data from the Bangko Sentral ng Pilipinas (BSP) show that the decrease of net inflows for the first seven months of this year was also a reversal from the 48.9-percent surge in the same period of 2021.
“All major FDI components yielded lower net inflows in January-July 2022 as foreign investors remained cautious amid continued adverse global conditions,” the BSP said in a statement.
The BSP data records capital that actually moved, instead of avowed commitments or planned investments, which may or may not be realized fully.
Reinvestments
From January to July, nonresidents’ net investments in debt instruments fell by 12.6 percent to $3.56 billion this year from $4.07 billion last year.
Also, net equity placements other than reinvestment of earnings decreased by 13.7 percent to $876 million from $1.02 billion.
Further, reinvestment of earnings settled at $670 million, easing by 5.7 percent from $710 million in the same period last year.
In July alone, FDI net inflows decreased due largely to the lower nonresidents’ net investments in debt instruments of their local affiliates. This was recorded at $213 million, an 80.6-percent drop from $1.09 billion.
“This decrease more than offset the growth in their (foreigners’) net investments in equity capital,” the BSP said.
Most of the equity capital placements in July came from Singapore, Japan and the United States. These were invested mainly in the industries of construction, manufacturing and real estate.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said July net inflows were the lowest in 14 months or since $455 million in May 2021 amid the increase in global and local market volatility in June-July 2022.
But Ricafort said there were positive factors that are offsetting the downtrend in net inflows, including investment commitments estimated at about $18 billion from foreign investors after the new administration’s recent visits to Indonesia, Singapore and the United States last month.
“[But we have] yet to see if these would translate to actual investments/FDI into the country,” he said. INQ