FDI retreats in March as investors turn glum

MANILA, Philippines — Foreign direct investments retreated in March as external headwinds muddied the global economy’s prospects. 

Data released by the Bangko Sentral ng Pilipinas on Tuesday showed FDIs amounted to net inflows of $548 million in March, declining 30.7% year-on-year. 

Inflows in the first quarter plunged 19.6% to $2 billion compared to a year ago. FDIs represent firmer commitments from foreign investors that generate jobs for Filipinos unlike the so-called “hot money”, which enters and leaves markets with ease.

The BSP projected the Philippines will rake in $11 billion in 2023. FDIs landed into net inflows in 2022 to $9.2 billion.

Domini Velasquez, chief economist at China Banking Corp., attributed the dismal performance to a weak investment environment. 

“The EU has entered a technical recession already, which could affect companies’ interest in expanding. Likewise, conditions remain tight in export-driven economies such as Singapore,” she said in a Viber message. 

Data broken down showed that intercompany borrowings between multinational companies and their local affiliates dropped 37.2% year-on-year to $389 million in March. 

Equity capital placements inched down 2.5% on-year to $115 million in the same period.

On the other hand, reinvestment of earnings dipped 0.1% on-year to $65 million in March. 

“Even if 2023 and the first half of 2024 will be driven by bleaker-than-expected investor sentiment, investment potential in the Philippines remain strong in the medium- to long-term,” Velasquez added. — Ramon Royandoyan