FDI inflows down 9.7 % in Jan-July

MANILA, Philippines – Total foreign direct investment (FDI) inflows retreated 9.7 percent in the first seven months of the year due to the economic uncertainty in advanced economies led by the US and the sovereign debt crisis in Europe, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP Governor Amando Tetangco Jr. said in a statement that FDI inflows reached $805 million in the first seven months of the year or $86 million lower than last year’s $891 million.

“Renewed concerns on sovereign debt issues in Europe and a stalled recovery in the US continued to weigh down on investor sentiment despite the Philippine economy’s continued favorable fundamentals,” Tetangco said.

He pointed out that equity placements fell 16.2 percent to $289 million in the first seven months of the year from $345 million a year ago while equity withdrawals plunged 74 percent to $53 million from $204 million.

The bulk of the investments, Tetangco said came from the US, Japan, Hong Kong, Korea, and Singapore. He said the investment inflows went into real estate, manufacturing, mining and quarrying, utilities as well as wholesale and retail trade sectors.

BSP data showed that 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 38.3 percent to $321 million in the first seven months of the year from from $520 million last year on account of trade credits extended by their parent companies abroad.

On the other hand, reinvested earnings went up by 7.8 percent to $248 million from $230 million as foreign enterprises opted to retain their earnings in local corporations.

For July alone, the BSP reported that net FDI inflows declined by 88.3 percent to $26 million from $222 million in the same month last year.

Equity placements fell 11.8 percent to $45 million in July from $51 million in the same month last year while withdrawals reached $2 milion from $4 million.

Likewise, reinvested earnings jumped 1,350 percent to $25 million from a net outflow of $2 million while other capital plunged 122.2 percent to a net outflow of $42 million from a net inflow of $189 million. –Lawrence Agcaoili (The Philippine Star)