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Net inflows of FDIs hit $9.8b in 2018

Net inflows of foreign direct investments reached $9.8 billion in 2018, the third straight year that the country drew more than $8 billion worth of foreign capital.

Data from the Bangko Sentral ng Pilipinas showed the 2018 net inflows were 4.4 percent lower than the record $10.3 billion the country received in 2017. Foreign investments hit $8.2 billion in 2016.

This means the total net inflows over the past three years reached $28.3 billion.

The Bangko Sentral said the 2018 figure missed the official target of $10.4 billion, as net investments of equity capital dropped 32 percent to $2.3 billion from $3.4 billion in 2017. 

The bulk of equity capital placements came from Singapore, the United States, Hong Kong, Japan, and China. 

“These were channeled primarily to manufacturing, financial and insurance, real estate, electricity, gas, steam, and air-conditioning supply, and arts, entertainment and recreation industries,” the BSP said in a statement.

Reinvestment of earnings declined 0.4 percent to $859 million in 2018 from $863 million in 2017. By contrast, net availment of debt instruments rose 11.3 percent to $6.7 billion in 2018 from $6 billion in 2017.

Data showed that in December, net FDIs fell 4.8 percent to $677 million from $712 million a year ago.

“The decline in FDI was due largely to the 57.6-percent drop in net investments of equity capital to $132 million from $312 million a year ago,” the BSP said.

ING Bank Manila senior economist Nicholas Mapa said the contraction in the so-called “fresh FDI” or the “equity other than reinvestment of earnings” account in 2018 was likely due to base effects after seeing fresh FDI poured in strongly for three straight years.  

“Perhaps uncertainty over the tax reform program may have some investors on wait-and-see attitude,” Mapa said.

Mapa said FDI flows would remain steady this year, as onshore firms continued to plow back money into the Philippines and their parent companies sent money back to their subsidiaries given the still upbeat prospects for GDP.  

“As for fresh FDI, we may need to get some more clarity on tax reform or substantial improvements in infrastructure quality before we see this account rise again,” Mapa said.

Finance Secretary Carlos Dominguez III earlier said President Rodrigo Duterte made the country a safer place for investors, with his campaign against corruption and criminality leading to a decrease in

crime volume by 21.86 percent since the start of his administration.

Dominguez also said the increasing volume of FDIs supported the Duterte administration’s efforts to shift the economy from consumption to investment-led growth and create decent, well-paying jobs for the young Filipinos entering the workforce each year.

The BSP expects FDI net inflows to hit $10.2 billion in 2019.

Topics: net inflows , foreign direct investments , Bangko Sentral ng Pilipinas , Nicholas Mapa
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