First-half FDI down 14% to $3.598B despite 182.7% jump in June

Ben O. de Vera, Inquirer, Sep 12, 2017

The net inflow of job-creating foreign direct investment (FDI) declined 14 percent year-on-year to $3.598 billion in the first half despite a 182.7-percent jump posted in June, the latest Bangko Sentral ng Pilipinas data released Monday showed.

The FDI registered in June increased by almost three-fold to $674 million from $238 million a year ago, “reflecting investors’ continued bullish outlook on the Philippine economy,” the BSP said in a statement.

The gross domestic product grew by an average of almost 6.5 percent during the first half, making the Philippines among the fastest-growing in the region.

However, the FDI that flowed in during the first six months dropped from $4.184 billion last year mainly due to a sharp decline in net equity capital.

From January to June, net equity other than reinvestment of earnings slid 90.3 percent to $141 million from $1.448 billion last year.

The sectors that received the largest chunk of the six-month equity capital infusion were electricity, gas, steam and air-conditioning supply; financial and insurance; manufacturing; real estate; as well as wholesale and retail trade.

The bulk of the end-June equity capital placements came from Hong Kong, Japan, Singapore, Taiwan and the United States.

Net investment in debt instruments climbed 29.2 percent year-on-year to $3.04 billion, while reinvestment of earnings grew 9 percent to $416 million as of June.

To compare, the $2.244-billion net FDI inflow recorded in April last year was the biggest-ever monthly figure, hence a high base year-on-year to date.

In June alone, investments in debt instruments—intercompany lending between foreign direct investors and their subsidiaries in the country—jumped 270.3 percent to $674 million from a year ago’s $182 million.

But the net withdrawal of equity capital investment in June widened to $72 million from $5 million last year.

The $185 million in withdrawals that month exceeded the $113-million placements.

The equity capital generated in June was mostly invested in electricity, gas, steam and air-conditioning supply; financial and insurance; manufacturing; professional, scientific and technical activities; and real estate.

These equity capital investments were sourced mainly from India, Japan, Singapore, Taiwan and the US.

Reinvestment of earnings, meanwhile, rose 16.5 percent to $72 million from last year’s $62 million.

For 2017, the BSP had projected FDI inflows to reach the $8-billion level.

In June, the BSP jacked up its 2017 FDI forecast from $7 billion previously, as the 2016 inflow hit a record-high of $7.933 billion.