The Department of Finance said Thursday the faster pace of vaccination rollout against COVID-19 will play a vital role in attracting more foreign direct investments in the coming months.
Finance Undersecretary and chief economist Gil Beltran said in an economic bulletin the continued year-on-year recovery of foreign direct investments in the first 10 months of 2021 suggested that the country’s long-term prospects remained positive in the eyes of investors.
“Sustaining the pace of our vaccination drive and responding appropriately to risks posed by the virus and its variants will be key in maintaining investor confidence,” Beltran said.
Latest data showed that net inflows of foreign direct investments sustained the uptrend for the fifth straight month in October, posting a 98.9-percent growth year-on-year to $855 million from $430 million a year ago.
This brought the FDI net inflows in the 10-month period to $8.1 billion, higher by 48.1 percent than the $5.5-billion net inflows a year earlier and surpassing the $8-billion net FDI target for the whole of 2021.
The recorded increase in FDI net inflows in October was mainly on account of the 78.5-percent growth in non-residents’ net investments in debt instruments to $637 million from $357 million in October 2020.
Non-residents’ net investments in equity capital (other than reinvestment of earnings) also increased to $141 million from $1 million in the comparable month in 2020.
The notable expansion was due to the improvement in equity capital placements by 80.0 percent to $154 million from $86 million and the decline in equity capital withdrawals by 84.1 percent to $13 million from $85 million.
Beltran said the considerable year-on-year increase in net debt instruments continued to contribute to the growth in FDIs observed in the first 10 months of 2021.
He said the proposed Capital Markets Development Act (House Bill 9343) would further increase demand for financial securities and support the continued growth of FDI.
“Additionally, the recently passed amendments to the Retail Trade Liberalization Act, along with other economic liberalization reforms such as the amendments to the Foreign Investment Act and the Public Service Act, if passed, will be instrumental in mobilizing more investments into the country and resume the path to an investment-led growth,” Beltran said.
The BSP revised upward the target for net inflows of foreign direct investments in 2021 to $8 billion from $7 billion previously, taking into account the improving global economic outlook.