Net FDI declines 15% to $552M in January-April

MANILA, Philippines – Net inflows of foreign direct investment (FDI) declined 15.1 percent in the first four months of the year due to the generally sluggish growth in advanced economies led by the US and Japan as well as the debt crisis in Europe, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Net FDI inflows amounted to $552 million in the first four months of the year or $98 million lower than the $650 million in the same period last year.

BSP Governor Amando Tetangco Jr. said in a statement that the decline could be attributed to external developments such as weak economic growth in the US, the debt crisis in Europe as well as the tensions in the Middle East and North African (MENA) states.

“Net FDI inflows in the first four months of 2011 declined by 15.1 percent from the same period in 2010 owing to generally sluggish growth in advanced economies, particularly in Japan and the US, and the prevailing cautious investor sentiment amid heightened uncertainties, as a result of the eurozone sovereign debt crisis in some parts of Europe and the social unrest in the Middle East and North African region,” Tetangco said.

The BSP said equity placements fell 23.9 percent to $150 million from January to April compared to $197 million in the same period last year while withdrawals plunged 48.4 percent to $49 million from $95 million. This translated to a slight one percent rise in net equity capital to $101 million from $102 million.

“The country, however, continued to be a recipient of foreign funds on account of its strong macroeconomic fundamentals and favorable growth prospects,” Tetangco added.

Monetary authorities expect the country’s economic growth picking up in the second half of the year after a slower 4.9 percent growth in the first quarter of the year.

Major sources of FDIs include the US, Singapore, Hong Kong, Japan, and the Netherlands. Bulk of the investments went to real estate, mining, manufacturing, wholesale and retail tradem utilities,and construction sectors.

The net inflow of other capital account consisting largely of intercompany borrowing between foreign direct investors and their subsidiaries or affiliates in the Philippines fell 20.7 percent to $283 million in the first four months from from $357 million in the same period last year while reinvested earnings retreated 12 percent to $168 million from $191 million.

For the month of April alone, the BSP said net FDI inflows declined 4.7 percent to $81 million from $85 million in the same month last year. Equity placements plunged 56 percent to $29 million in April from $66 million in the same month last year while withdrawals remained unchanged at $9 million. –Lawrence Agcaoili (The Philippine Star)