Net inflows of foreign direct investments jumped 52 percent in July to $1.3 billion from $831 million a year ago, driven by the country’s continued attractiveness to investors despite the global health crisis, data from the Bangko Sentral ng Pilipinas show.
The figure brought the cumulative FDI net inflows in the first seven months to $5.6 billion, up 43.1 percent from the $3.9-billion net inflows registered in the same period last year.
“This was mainly on account of the 78.7-percent expansion in non-residents’ net investments in debt instruments to $3.9 billion from $2.2 billion,” the BSP said in a statement.
Reinvestment of earnings reached $677 million in the seven-month period, or 19.3 percent higher than $567 million a year earlier. However, non-residents’ net investments in equity capital other than reinvestment of earnings declined by 12.4 percent to $1 billion from $1.1 billion.
“The increase in FDI net inflows in July was due mainly to the 61.1-percent growth year-on-year in investments in debt instruments to $1.1 billion from $667 million. Similarly, reinvestment of earnings rose by 87.1 percent to $155 million from $83 million,” the BSP said.
Meanwhile, non-residents’ net investments in equity capital contracted by 58.3 percent to $34 million in July from $81 million in the same month in 2020. This developed as the 634.7-percent increase in equity capital withdrawals to $57 million from $8 million more than offset the 2.6-percent rise in equity capital placements to $91 million from $89 million.
The bulk of the equity capital placements in July came from Japan, the United States and Hong Kong. Those investments were channeled mostly to manufacturing, real estate and financial and insurance industries.
The BSP said that in the first seven months, net investments in equity capital decreased by 12.4 percent because of the downturn in placements by 9.5 percent to $1.2 billion from $1.4 billion and the increase in withdrawals by 6.0 percent to $223 million from $210 million.
Equity capital placements came mainly from Singapore, Japan and the United States and were infused mostly in manufacturing; financial and insurance; and electricity, gas, steam and air-conditioning industries.
The BSP statistics on FDI are compiled based on the balance of payments and international investment position. FDIs include investments by a non-resident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent and investment made by a non-resident subsidiary/associate in its resident direct investor.
FDIs can be in the form of equity capital, reinvestment of earnings and borrowings. The BSP FDI statistics are distinct from the investment data of other government sources.
Net FDI inflows hit $6.6 billion in 2020. The BSP expects net FDIs to improve to $7 billion this year, taking into account the gradual reopening of major economies that could boost global trade and investments.
