Foreign investments drop to 5-month low in August 2018

MANILA, Philippines — Foreign direct investment (FDI) inflows dropped by more than 41 percent to a five-month low of $752 million in August from $1.28 billion in the same month last year amid concerns over rising interest rates and slower economic expansion, according to the Bangko Sentral ng Pilipinas (BSP).

This was the lowest level since FDI inflows reached $697 million in March.

Equity placements plunged by 72 percent to $187 million in August from $671 million in the same month last year while withdrawals declined 16 percent to $16 million from $19 million.

The central bank said capital infusions came primarily from Singapore, the US, Japan, Hong Kong, and China and were infused into manufacturing; real estate; electricity, gas, steam, and airconditioning supply; information and communication as well as financial and insurance activities.

The BSP said the bulk of the net FDI inflows in August was in the form of intercompany borrowings or lending between foreign direct investors and their subsidiaries in the Philippines.

Investments in debt instruments slipped by 6.2 percent to $534 million in August from $569 million in the same month last year, while reinvestment of earnings fell 19.2 percent to $47 million from $59 million.

Despite the decline in August, the eight-month tally was 31 percent higher at $7.42 billion compared to $5.66 billion in the same period last year.

“FDI inflows remained strong amid continued favorable investor sentiment on the Philippine economy on the back of the country’s strong macroeconomic fundamentals and growth prospects,” the BSP said.

Equity infusions from Singapore, Hong Kong, the US, Japan and China surged by nearly 64 percent to $2.21 billion in the first eight months from $1.35 billion in the same period last year.

On the other hand, withdrawals dropped by nearly 46 percent to $196 million from $361 million.

Furthermore, data showed investments in debt instruments went up by 18 percent to $4.87 billion from $4.13 billion, while reinvestment of earnings slipped 1.7 percent to $536 million from $584 million.

The BSP has raised its FDI target for this year to $9.2 billion from $8.2 billion amid the positive investor sentiment. The projected FDI inflow this year, however, is lower than the record $10.02 billion booked in 2017.