Foreign direct investments slump at end-February

FOREIGN direct investment (FDI) inflows slumped in February amid a global financial crisis, the Bangko Sentral ng Pilipinas (BSP) said.

In a statement, the BSP said FDI inflows dropped by 82.2 percent year-on-year to $16 million from $90 million in February last year.

This brought net inflows in the first two months to $29 million, or 75.2 percent lower than the $117 million registered in the same period last year.

This year’s investments went largely into the real estate, financial intermediation, and trade and commerce sectors.

“The country continued to show resilience in the face of challenging global economic conditions, with cumulative FDI net inflows in the two months to February reaching $29 million,” BSP Governor Amando Tetangco Jr. said.

 Net equity capital inflows amounted to $64 million in the first two months, about half the level posted a year ago.

However, higher reinvested earnings of $28 million were recorded during the period, a reversal of the net outflow realized in the same period in 2008.

By contrast, the other capital account reversed to a net outflow of $63 million due mainly to inter-company loan payments by local subsidiaries/affiliates to their parent companies abroad and transfer of profits by local branches of foreign banks to their head offices abroad.

The other capital account consists largely of inter-company borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the country.

The BSP projected FDI inflows to reach $700 million this year, or half the registered $1.520 billion last year. This is lower than its original forecast of flat growth.

The bulk of investments would flow into the mining and quarrying, manufacturing, financial intermediation, agriculture, and business process outsourcing (BPO) sectors.

The BSP has maintained its projection of $700-million surplus in the country’s balance of payments (BOP), which is a summary of Philippine economic transactions with the rest of the world. Last year, the BOP surplus stood lower at $89 million. –Maricel E. Burgonio, Senior Reporter, Manila Times