Net foreign direct investments (FDI) dropped to $1.98 billion as of end-April or 32.1 percent lower compared to same time last year of $2.91 billion, the Bangko Sentral ng Pilipinas (BSP) said Wednesday.
“The slowdown in FDI inflows reflected the continued weak global and domestic demand prospects prompting many investors to put on hold investment plans amid the unresolved COVID-19 pandemic,” said the BSP. FDI as reported by the BSP includes equity capital, reinvestment of earnings, and borrowings.
The FDI net inflows were lower in the first four months because of the $1.1 billion decline in debt instruments’ net investments or a decrease of 53 percent year-on-year from $2.3 billion. Net investments in debt instruments consist mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines.
Reinvestment of earnings in January-April also contracted by 21.7 percent to $269 million from $343 million same time in 2019.
“The reduction in FDI for the period (first four months) was tempered by the 95.2 percent increase in
net investments in equity capital to $661 million from $338 million,” the BSP noted.
Equity capital placements mostly came from investors located in Netherlands, Japan, and Singapore during the period. These funds were invested in the manufacturing, real estate, and administrative and support service industries.
For the month of April only, FDI net inflows fell by 67.9 percent to $311 million compared to $971 million in April last year.
There was a lower net investments in debt instruments of $223 million which was 73.2 percent lower year-on-year or from $832 million.
Equity capital also decreased by 82.6 percent to $7 million. Equity capital placements – mostly from Japan, US, Singapore and Germany — declined by 68.3 percent to $47 million from $147 million.
Reinvestment of earnings also dropped by 15.8 percent to $81 million from $96 million same time in 2019.
The BSP has revised its net FDI forecast for 2020 lower to $4.1 billion from its pre-pandemic projection of $8.8 billion.
BSP Governor Benjamin E. Diokno said that for next year, they do expect a recovery in net FDI of $6.5 billion.
In 2019, net FDIs totaled $7.6 billion, down by 23.1 percent from 2018’s $9.9 billion.
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