10 Dec 2020 – Pandemic saps January-September long term investments in PH

by Daxim L. Lucas, Philippine Daily Inquirer, 10 Dec 2020

MANILA, Philippines—Long tern investments in the Philippines declined by over a tenth last September after four consecutive months of double-digit year-on-year growth as the lockdown in the preceeding month curtailed investor activity, according to the central bank.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said the net inflow of foreign direct investments (FDIs) to the country contracted to $523 million in last September, which was lower by 12.3 percent than the $596 million net inflow posted in the same month in 2019.

“The two-week modified enhanced community quarantine in Metro Manila and surrounding areas in the first half of August may have dampened investor sentiment on prospects of the economy’s reopening,” the central bank said.

The decline in net FDI inflow during the month was largely due to the 14.3 percent drop in nonresidents’ net investments in debt instruments, which amounted to $362 million from $423 million in September 2019.

Reinvestment of earnings dipped by 19.7 percent to $62 million from $77 million in the same month in 2019.

Equity capital infusions during the month emanated mainly from Japan, the United States, and Singapore. These placements were channeled largely to the manufacturing, real estate, and financial and insurance industries.

For the first three quarters of 2020, net FDI inflow declined by 8.6 percent to $4.8 billion from the $5.3 billion in the comparable period of 2019.

“The decline in investment inflow reflected the worldwide cautious investment climate, following the continued effects of the prolonged COVID-19 health crisis on the global economic outlook,” the central bank said.

By component, nonresidents’ net investments in debt instruments fell by 22 percent to $3 billion from $3.8 billion. Likewise, reinvestment of earnings decreased by 20.5 percent to $639 million from $804 million during the period.

The bulk of the equity capital placements from January to September originated from Japan, the Netherlands, the US and Singapore. These went mostly to manufacturing, real estate, and financial and insurance industries.