Job-creating investments in the Philippines decline in early 2019

By: Daxim L. Lucas, Philippine Daily Inquirer, Jun 10, 2019

MANILA, Philippines—The flow of job-creating investments into the Philippines slowed in the first quarter of the year after going strong in 2018, according to the Bangko Sentral ng Pilipinas (BSP).

Data released by the BSP showed foreign direct investments, or those that go to businesses that create jobs, fell to $1.9 billion in the first quarter of 2019, a decline of 15.1 percent from $2.3 billion in the same period in 2018.

The BSP, in a statement, said this was the result of lower equity capital, or money used to build or expand factories, offices and other businesses, entering the Philippines from $887 million in the first quarter of 2018 to just $295 million in this year’s first quarter.

The central bank said equity capital placements fell to $568 million from $996 million while withdrawals, or investors’ money leaving, increased to $273 million from $109 million

Total equity flow into the Philippines in the first three months of 2019, the BSP said, declined by 67 percent, including a surge of 150 percent in capital repatriation, or investment money returning to its country of origin. The figures did not include earnings by foreign companies reinvested in the Philippines, though.

Foreign capital during the first quarter of 2019 came from Japan, China, United States, Singapore and South Korea. This went largely to financial and insurance, real estate, transportation and storage, manufacturing, administrative and support service industries.

Still according to the BSP, net investments on debt instruments, like treasury notes and bonds, increased by 18.6 percent to $1.4 billion early this year from $1.2. billion in the same period in 2018. Earnings reinvested in the Philippines also increased, by 11.3 percent to $234 million in the first quarters of 2019 from $211 million in the same period in 2018.

Last March alone, foreign direct investment was lower by 13.9 percent or $586 million compared to $681 million in the same month in 2018.

A drop in net equity capital investments may have something to do with this. Placements of such kind of investments dropped to $126 million in March 2019 from $351 million in the same month in 2018.

Foreign capital entering the Philippines in March came mostly from Japan, United States, Singapore and the Netherlands. These investments went mostly to manufacturing, real estate, hotel and food service, wholesale and retail trade and arts, entertainment and recreation facilities.

Foreign investments on debt instruments, mainly loans from parent companies abroad to their Philippine affiliates, increased by 35.8 percent to $399 million from $294 million last year.

Earnings by foreign investors that were pumped back into the Philippine economy grew by 14.4 percent to $80 million from $70 million a year ago. (Editor: Tony Bergonia)