Foreign direct investments rise by 17.9% in February

MANILA, Philippines – Foreign direct investments (FDI) rose by 17.9% in February 2015, the Bangko Sentral ng Pilipinas (BSP) reported Monday, May 11. 

FDIs slumped by 71% in January – the lowest in 13 months. Overall FDIs are volatile and therefore vulnerable to big-ticket projects, such as public-private partnerships (PPPs) that are underway. A project may pour in billions of dollars in any given month, thus volatility in FDI data should be expected from month to month.

FDI flows may still rise by yearend, with Southeast Asia benefiting from foreign investors seeking to grow in rapidly growing markets. However, the country’s share of FDI might still be lackluster, attributed to poor infrastructure that still turns off investors, analysts said.

The latest figures showed that FDIs reached $359 million from $305 million in the same period the previous year. This was mainly attributed to the 184.7% increase in net equity capital to $179 million as gross equity capital placements expanded by 103.6%, while withdrawals declined by 59.4%. 

The bulk of these equity capital investments mainly from the United States, Spain, the United Kingdom, Japan, and Singapore, was channeled primarily to manufacturing; electricity, gas, steam and air conditioning supply; financial and insurance; transportation and storage; and professional, scientific and technical activities. 

Meanwhile, non-residents’ investments in debt instruments (or lending by parent companies abroad to their local affiliates to fund current operations and business expansion) amounted to $122 million, lower by 29.5% compared to the level registered in the same month in 2014.

Similarly, reinvestment of earnings decreased by 15.9% to $58 million.

Lower numbers

FDI net inflows, on the other hand, reached $622 million in the first two months of 2015 on a year-to-date basis, but this was 48.6% lower than the $1.2 billion net inflows recorded in the same period last year as all FDI components like debt instruments, net equity capital, reinvestments of earnings posted lower net inflows.

Non-residents’ investments in debt instruments, which accounted largely for the decline, contracted by 61.8% from $757 million to $289 million due to lower debt availments from January to February 2015.

Net equity capital also declined by 22.4% from $264 million to $205 million. Equity capital investments during the period, which came mostly from the US, Spain, Singapore, Japan and Germany were channeled mainly to manufacturing; electricity, gas, steam and air conditioning supply; financial and insurance; real estate; and transportation and storage activities.

Reinvestment of earnings for the first two months of 2015 reached $128 million, lower by 32.1%.

In March 2015, the BSP reported that money pumped by foreign investors into the country reached $6.2 billion in 2014, a 65.9% increase from 2013’s $3.7 billion.

Also in March, BSP Deputy Governor Diwa Guinigundo assured foreign investors that the economic reforms instituted by the Aquino administration would continue beyond 2016.

The Philippines has been enjoying a long history of economic and financial reforms despite changes in political administrations, wrote Guinigundo, in response to foreign investors’ sentiment expressed in a Rappler article, “Foreign investors jittery over PH 2016 presidential polls.”

While the government keeps on touting foreign investors’ confidence in the country, the Joint Foreign Chambers (JFC) in the country earlier said though that FDI should be around 10% instead of about 6%. – Rappler.com