Net FDI inflow down 2.2% in February

MANILA, Philippines — The net inflow of foreign direct investments (FDIs) declined by 2.2 percent in February on the back of a sharp drop in equity placements, but still managed to climb by 21 percent in the first two months amid the raging COVID-19 pandemic, according to the Bangko Sentral ng Pilipinas (BSP).

The net FDI inflow reached $608 million in February, $13 million lower than the $621 million in the same month last year.

The BSP said the slight decline emanated mainly from the 88.3 percent drop in non-residents’ net investments in equity capital to $20 million in February from $175 million a year ago.

Equity capital placements coming primarily from the US, Japan, the Netherlands, Malaysia and Singapore plunged by 62.1 percent to $89 million in February from $236 million in the same month last year.

The amount was channeled to manufacturing, real estate, wholesale and retail trade, financial and insurance as well as electricity, gas, steam and air-conditioning supply industries.

On the other hand, equity pulled out from the Philippines went up by 13.6 percent to $72 million in February from $61 million a year ago.

Net investment in debt instruments consisting mainly of loans extended by parent companies abroad to their local affiliates surged by 36.1 percent to $515 million in February from $378 million in the same period last year.

Likewise, reinvestment of earnings inched up by 6.1 percent to $72 million in February from $68 million a year ago.

Notwithstanding the decline in February, the BSP said the net FDI inflow went up by 20.6 percent to $1.57 billion in the first two months from $1.3 billion in the same period last year.

This was due mainly to the 67.7 percent expansion in non-residents’ net investments in debt instruments to $1.05 billion from $626 million.

This erased the 26 percent decline in equity placements to $451 million in the first two months from $610 million in the same period last year.

Equity capital placements in January and February originated mostly from Singapore, Japan, the Netherlands, and the US. The infusion went to financial and insurance, manufacturing and real estate industries.

On the other hand, withdrawals declined by 6.8 percent to $79 million from $85 million, while reinvestment of earnings slipped by 2.3 percent to $146 million from $149 million.

The BSP sees net FDI inflow bouncing back to $7.8 billion this year and $8.8 billion next year. The net FDI inflow into the country has steadily declined after hitting a record high $10.3 billion in 2017.