Net FDI inflows stay positive in June
NET foreign direct investment (FDI) inflows posted a month-on-month drop in June but were still higher from a year ago, the Bangko Sentral ng Pilipinas (BSP) reported on Monday.
Net inflows plunged by 49.5 percent to $831 million from May’s $1.645 billion, central bank data showed. Compared to a year earlier, it was up 9.2 percent from $761 million.
The result — the lowest since the P697 million posted in March this year — brought the year-to-date tally to $5.755 billion, 42.4 percent higher compared the same period last year.
“The continued inflows of FDI indicate investor confidence in the Philippine economy on the back of strong macroeconomic fundamentals and growth prospects,” the Bangko Sentral said in a statement.
Non-residents’ net placements in debt instruments issued by local affiliates or intercompany borrowings amounted to $569 million, down 24.6 percent from a year ago.
The BSP noted a turnaround in net equity capital inflows during the month to $184 million as placements of $208 million more than offset the $24 million in withdrawals.
“Equity capital placements came mostly from Singapore, Luxembourg, Japan, the United States and the Netherlands,” it said.
Reinvestments of earnings also increased by 7.1 percent to $77 million in June from a year ago.
Sought for comment, Bank of the Philippine Islands Vice-President and lead economist Jun Neri said that while slower, “the latest numbers should help offset the outflows emanating from the wider current account deficit and sustained foreign portfolio outflows in the local equities market.”
“The latest numbers also affirm the recovery in capital goods spending which have returned to levels not seen since the early 1980s,” he added.
Net FDI inflows for January to June were driven largely by $3.751 billion in net investments in debt instruments, which were 9.6 percent higher reckoned from a year earlier.
Net investments in equity capital, meanwhile, surged to $1.585 billion from $201 million as gross placements of $1.747 billion more than compensated for withdrawals of $163 million.
Equity capital infusions during the period came mainly from Singapore, Hong Kong, China, Japan and the United States, and were invested in manufacturing; financial and insurance; real estate; arts, entertainment and recreation; and electricity, gas, steam and air-conditioning supply activities.
Reinvestments of earnings were also higher at $420 million, the Bangko Sentral said.
The central bank expects FDI net inflows to reach $9.2 billion this year, which it said would be “driven primarily by the sustained positive developments in the domestic economy, expected improvement in global economic conditions relative to 2017 as well as the implementation of public-private partnership projects that were approved/awarded in the previous years, when most projects started.”
“FDI uptick is further seen in 2018 in line with the continued fast-tracking and modernization of the country’s soft and hard infrastructure, growing interest from non-traditional investment sources, and improved global perception of the Philippines as an investment destination,” it added.
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