BSP: Net FDI inflow shrank 20% in H1

MANILA  -Jitters over global economic uncertainties and weak growth caused the net inflow of foreign direct investments (FDI) into the Philippines to shrink by 20.4 percent in the first semester to $3.91 billion this year from $5.47 billion last year, according to the Bangko Sentral ng Pilipinas (BSP).

The first-half result for 2023 meant a reversal from the 13.4-percent increase recorded in the same period last year.

“The slowdown in FDI (in the January-June semester) may be due largely to investor concerns over weak growth prospects amid persistent global uncertainties,” the BSP said in a statement.

In June alone, net inflows slid down for the fourth month in a row, although at the slowest rate during that stretch.

The decrease in June was due to an 11.8 percent drop in non-residents’ net investments in equity capital other than reinvestments of earnings, which settled at $111 million from $126 million.

Also cited as a cause was a 26.8-percent drop in nonresidents’ reinvestment of earnings to $89 million from $122 million.

These decreases overwhelmed an 11-percent jump in net investments in debt instruments in June, which reached $283 million from $255 million.

The bulk of the equity capital placements in June 2023 were sourced primarily from Japan, the United States, and Singapore. These were infused largely to the 1) manufacturing; 2) real estate; and 3) information and communication industries.

Equity capital placements were invested mainly in the manufacturing, real estate industries, and information and communication industries, the bulk of which came from Japan, the United States and Singapore.

Foreign sortie

The first-semester results came out as the Marcos administration’s economic team was at their latest foreign sortie to drum up investor interest in the Philippines.

On Sept. 10, the team led by Finance Secretary Benjamin Diokno was in Doha, Qatar, where he highlighted the Philippine government’s 197 infrastructure flagship projects, 39 of which will be undertaken through public-private partnerships (PPPs).

In Doha, the finance chief gave investors an overview of the Philippines’ enhanced PPP policy environment, which allowed for faster PPP approvals thanks to the revised implementing rules and regulations of the Build-Operate-Transfer Law, revised guidelines from the Investment Coordination Committee, and enhanced Joint Venture Guidelines from the National Economic and Development Authority.

Diokno also talked about the Philippines’ improved corporate tax and fiscal incentives system, reformed through the Corporate Recovery and Tax Incentives for Enterprises (Create) Act, which reduced the country’s corporate income tax rates and rationalized the fiscal incentives system to make it performance-based, timebound, targeted, and transparent.

Diokno also introduced the Maharlika Investment Fund, which will serve as an additional source and mode of financing for the priority projects of the government.

The economic team is due in Dubai today, Sept. 12, to bring their roadshow to the United Arab Emirates. INQ