FDI inflows up for 4th straight month

Foreign direct investments to the Philippines grew for a fourth month in a row in August. — REUTERS

FOREIGN INVESTMENTS to the Philippines grew for a fourth straight month in August due to renewed investor confidence despite the coronavirus disease 2019 (COVID-19) pandemic, the central bank said.   

Data from the Bangko Sentral ng Pilipinas (BSP) showed net inflows of foreign direct investments (FDI) climbed by 46.9% to $637 million in August, from the $434 million logged in August 2019. However, this was 20% lower than the $797 million in July.

“The FDI net inflows increased for the fourth consecutive month, owing to investors’ renewed confidence as the National Government’s fiscal stimulus and BSP’s accommodative monetary policy stance to mitigate the impact of COVID-19 pandemic gained traction along with the easing of quarantine measures in the country,” the central bank said in a statement on Tuesday evening.

For the first eight months, FDI inflows dropped 5.6% to $4.432 billion from $4.693 billion a year ago.

“The four consecutive months of growth since May resulted in the considerable narrowing of the cumulative net FDI contraction of 27.9% in April 2020,” the BSP said.

The central bank slashed its projection for total FDI inflows this year to $4.1 billion due to the impact of the pandemic, less than half of its earlier projection of $8.8 billion.

The higher FDI net inflows were mainly due to the 72.2% surge in net investments in debt instruments to $459 billion.

Equity other than reinvestment of earnings rose by 32.9% to $107 million, as placements jumped 30% to $118 million. Withdrawals went up by 7.1% to $10 million.

During the month, most of the equity capital placements came from Japan, the United States, and the British Virgin Islands.

“Investments were channeled largely to manufacturing, real estate, financial and insurance, administrative and support service, and wholesale and retail trade industries,” the central bank said.

Meanwhile, reinvestment of earnings declined by 17.9% to $71 million.

Analysts said the continued improvement in FDI inflows may suggest investor confidence is returning, as restriction measures have been eased to boost economic activity.

“As the Philippines is relatively stable politically compared to neighboring countries, it boosted investor confidence allowing certain growth momentum to recover — one of which are FDIs,” Asian Institute of Management economist John Paolo R. Rivera said in an e-mail.

Inflows of FDI are likely to continue rising in the next months as investors await developments in the search for a COVID-19 cure and vaccine.

“I expect that FDI will remain in its bullish status in the coming months owing to the possible solution to the pandemic and the steady improvement in the economic activity of the local economy,” Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said. — Luz Wendy T. Noble

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