Net inflows of foreign direct investments fell 38.2 percent in January 2019 to $609 million from $986 million a year ago on lower equity capital placements, the Bangko Sentral ng Pilipinas said Wednesday.
“The decline in FDI net inflows reflected the 65.3-percent drop in equity capital placements to $184 million during the month from $531 million for the same period a year ago,” the BSP said in a statement.
Equity capital placements came mostly from Mauritius, South Korea, the United States, Singapore, and the Netherlands. These were invested in financial and insurance, administrative and support services, real estate, electricity, gas, steam, and air-conditioning supply and information and communication industries.
“Further, the increase in equity capital withdrawals to $229 million in January 2019 from $58 million in January 2018 contributed to the decrease in FDI net inflows,” it said. Equity capital withdrawals in January 2019 were mainly from Japan.
Meanwhile, net investments in debt instruments, mainly inter-company borrowings/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines, increased 31 percent to $577 million from the year-ago level of $441 million.
Reinvestment of earnings rose to $76 million from $71 million in the same month in 2018.
Net inflows of foreign direct investments reached $9.802 billion in 2018, slightly lower than the record $10.256 billion in 2017.
The full-year number missed the official target of $10.4-billion net inflows set by the Bangko Sentral.
Data showed that net investments of equity capital in 2018 declined 32 percent to $2.3 billion from $3.4 billion recorded in 2017. The bulk of equity capital placements were sourced mainly from Singapore, the United States, Hong Kong, Japan and China.
ING Bank Manila senior economist Nicholas Mapa earlier 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 pour 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 were expected to send money back to their subsidiaries given the still upbeat prospects for GDP.
Finance Secretary Carlos Dominguez III 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.