Foreign direct investments in the country fell in November due largely to unfavorable developments offshore, according to the Bangko Sentral ng Pilipinas.
According to the BSP, the lingering debt crisis in the eurozone prompted many foreign investors to stay in the sidelines as they thought the turmoil could have ill effects even on emerging economies like the Philippines.
Foreign direct investments registered a net inflow (gross inflows less outflows) of $53 million in November last year, falling by nearly 83 percent from $340 million in the same month of the previous year, the BSP said.
For the first 11 months of 2011, the net inflow amounted to $782 million, which was about 36 percent lower than the $1.3 billion in 2010.
Gross inflows in January to November amounted to $1.2 billion, falling year on year by 20 percent from $1.5 billion.
“(The drop in investments) reflected weaker investor sentiment brought forth by the lingering eurozone sovereign debt crisis even as the Philippine economy showed resilience amid a healthy external payments position and easing price pressures,” the BSP said in a statement.
The BSP said the drop is on account of discouraging events abroad, stressing that domestic economic indicators that businesses normally consider in making investment decisions were favorable.
For instance, the BSP said, the relatively low inflation in the country meant that the cost of raw materials and other goods needed for production are affordable.
Inflation rate, or the increase in consumer prices, averaged at 4.8 percent. The BSP targeted an inflation rate of between 3 and 5 percent for last year, saying that any rate between the range is something that is manageable.
The BSP also cited the country’s growing reserves of foreign exchange, which are driven by remittances from Filipinos based offshore. The remittances help fuel household consumption, the continued growth of which should be favorable for businesses selling consumer goods.
But as the Philippines cited uncontrollable external factors for the decline in foreign investments, neighboring countries Indonesia and Malaysia, managed to attract more investments in 2011 compared with those they cornered the previous year.
Indonesia enjoyed $19.3 billion in gross inflows of foreign direct investments last year, about 18 percent up year on year. Malaysia got $10 billion, up from $9.1 billion previously.