Foreign direct investments dipped in February

The Philippines failed to attract as much investments last February as it did the same month last year as investors shied away from risky assets to focus more on advanced economies, which have started to recover from the 2008 global financial crisis.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed a steep decline in long-lasting foreign direct investments in February—a reversal from the slight increase posted the month before.

The decline was a result of significant drops in new investments in the form of equity capital, and multinationals’ lending to their units in the Philippines.

A total of $350 million in FDIs entered the country in February—75.3 percent lower year-on-year. This brought the cumulative figure to $1.37 billion—down 24.7 percent from the inflows seen in January and February 2013.

Bulk of equity capital investments came from the United States, Japan, Singapore, Germany and Hong Kong. The funds made their way into the financial and insurance, real estate, transportation, manufacturing and mining sectors.

Bucking the trend, reinvested earnings of multinationals rose by 11.3 percent during the month to reach $70 million, the BSP said.

“Foreign investors opted to retain their earnings in local corporations on the back of favorable prospects for the Philippine economy,” the BSP statement read.

BSP Deputy Governor Diwa C. Guinigundo last month described the first quarter of the year as “challenging times” for emerging markets, even for investment darlings like the Philippines, trying to attract cash from overseas. Fund managers now have their eyes fixed on advanced economies like the United States, Europe and Japan, which have started to recover from the 2008 recession.

FDIs directly contribute to job creation because the funds bankroll the expansion of foreign companies in the country. Divesting from these types of businesses is harder. Thus, the money poured into the country will stay for the long haul.