Foreign direct investments yield $481M net inflow in June, up 7.1% —BSP

Foreign direct investments (FDI)—investments made by foreign companies or individuals in the Philippines— saw further improvement in June amid the easing of lockdown restrictions during the period, the Bangko Sentral ng Pilipinas (BSP) reported Tuesday.

Data released by the BSP showed FDI stood at a net inflow of $481 million, up 7.1% from $449 million in the same period in 2019.

“This positive development was underpinned by the gradual reopening of advanced economies with investment interest in the Philippines, and the country’s sustained strong macroeconomic fundamentals, despite the COVID-19 pandemic,” the central bank said.

The 7.1% net FDI inflows increase in June further reduced the cumulative contraction to 18.3% in the January to June period at $3 billion from $3.7 billion year-on-year.

The first semester net FDI inflow decline is also an improvement from the 21.9% slide posted in January to May.

In particular, the BSP said net equity capital investments expanded to $173 million in June from $29 million year-on-year, on the back of 137.6% increase in equity capital placements to $185 million from $78 million and the decline in withdrawals by 74.9% to $12 million from $49 million).

The bulk of the equity capital placements for the month originated from Japan, the United Kingdom and the United States, according to the BSP.

These placements were invested mainly in manufacturing, human health and social work, financial and insurance, and real estate industries.

Net investments in debt instruments in June dropped by 28.8% to $229 million from $321 million in June 2019.

Reinvestment of earnings was also lower by 19.4% at $80 million compared to $99 million a year ago.

For January to June, FDI improvements was led by net investments in equity capital, which registered a growth of 146.8% to $910 million from a 117.1% cumulative growth by end-May.

“The favorable performance in net investments in equity capital was attributed to the combined effects of an expansion in equity placements of 16.6% to $1 billion (from $881 million), and a contraction in withdrawals of 77.1% to $117 million (from US$512 million),” the BSP said.

Equity capital placements in the first half were sourced primarily from Japan, the Netherlands, Singapore, and the United States.

“These were infused mainly in manufacturing, real estate, financial and insurance and administrative and support service industries,” the central bank said. -MDM, GMA News