Net inflow of foreign direct investments jumped 35.2 percent in July to $797 million from $590 million a year ago, sustaining an uptrend for the third consecutive month despite the impact of the health crisis on global financial markets, the Bangko Sentral ng Pilipinas said Monday.
“The FDI net inflows rose for the third consecutive month on the back of investors’ improving sentiment due in part to easing of containment measures and some signs of gradual improvements in economic activity based on high-frequency indicators,” the BSP said in a statement.
It said the growth in FDI net inflow in July was led by net investments in debt instruments, which surged 60.1 percent to $643 million from $402 million a year earlier.
Net equity capital investments, however, declined 19.6 percent in July to $81 million from $101 million in the same month last year, pulled down by lower equity placements of $89 million compared to $170 million in July 2019. This was mitigated by a decline in withdrawals to $8 million from $69 million a year earlier.
Equity capital placements in July came mostly from Japan, China and the United States. These were mostly channeled to construction, real estate, wholesale and retail trade and manufacturing industries.
Reinvestment of earnings decreased 16.1 percent in July to $73 million from $87 million in the same month last year.
The increase in FDI net inflow in July mitigated the seven-month decline in the first seven months to 10.9 percent (to $3.8 billion from $4.3 billion).
“Driving this development was the increase in net equity capital investments, which posted a cumulative growth of 111.1 percent to $991 million from $469 million,” the BSP said.
Equity capital placements in the seven-month period grew moderately by 6.2 percent to $1.12 billion from $1.05 billion, while withdrawals declined by 78.5 percent to $125 million from $582 million. These came mainly from Japan, the Netherlands, Singapore and the United States and were invested in manufacturing, real estate, financial and insurance and administrative and support service industries in the first seven months.
Net investments in debt instruments and reinvestment of earnings recorded lower reductions of 27.1 percent to $2.3 billion and 20.9 percent to $506 million, respectively.
The BSP FDI statistics are distinct from the investment data released by other government sources. The BSP FDI figures cover actual investment inflows while the approved foreign investment data published by the Philippine Statistics Authority are sourced from investment promotion agencies such as the Board of Investments and Philippine Economic Zone Authority.
Net FDI flows went down by 23 percent in 2019 to $7.7 billion from $9.9 billion in 2018. For 2020, the BSP expects the FDI inflows to reach $4.1 billion, taking into account the disruption caused by the pandemic to the global economy.
It said that in 2021, FDIs were expected to reach $6.5 billion on assumption that the pandemic would be over and the economy would recover from the slump.