FDI inflows plunge to 14-month low in September 2018

MANILA, Philippines — Strong outflows due to the full blown trade war between the US and China as well as the elevated inflation in the domestic front resulted in a 30 percent drop in foreign direct investment (FDI) inflows in September, the Bangko Sentral ng Pilipinas (BSP) reported late Monday.

Data showed net FDI inflows plunged to a 14-month low of $569 million in September, $238 million lower than the $807 million recorded in September last year.

This was the lowest level since FDI inflows reached $344 million in July last year.

Equity placements plunged by nearly 75 percent to $69 million from $270 million, originating largely from the US, Japan, Macau, Hong Kong and China. The infusions were channeled mostly to real estate, manufacturing and electricity, gas, steam as well as air-conditioning supply activities.

On the other hand, the central bank said withdrawals reached $187 million in September, more than 15 times the $12 million worth of funds pulled out from the country in the same month last year.

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

Investments in debt instruments climbed by 24.3 percent to $609 million in September from $490 million in the same month last year, while reinvestment of earnings jumped by 33 percent to $78 million from $59 million.

Despite the external and domestic headwinds, FDI inflows went up 24.2 percent to $8.04 billion from January to September this year compared to $6.47 billion in the same period last year.

“Investment inflows continued, buoyed by investor confidence in the Philippine economy on the back of strong macroeconomic fundamentals and high growth prospects,” the central bank said.

As a result, foreign investors infused $2.28 billion in fresh capital into the country in the first nine months, 41 percent higher than the $1.62 billion injected in the same period last year.

The fresh capital coming from Singapore, Hong Kong, US, Japan, and China were infused in manufacturing, financial and insurance, real estate, arts, entertainment and recreation as well as electricity, gas, steam and air-conditioning supply activities

On the other, equity withdrawals rose by only 2.4 percent to $382 million from $373 million.

Reinvestment of earnings climbed by 1.7 percent to $614 million from $604 million, while investments in debt instruments rose 19.6 percent to $5.52 billion from $4.62 billion.

The BSP has raised its FDI target for this year to $9.2 billion last June from $8.2 billion in November last year amid the positive investor sentiment.