FDI down more than half in January

FOREIGN DIRECT investments (FDI) took a nosedive in January as equity capital shrank, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

FDI registered a net inflow of $576 million in January, down more than half from the $1.053 billion posted in the same month last year.

Equity capital contributed a net inflow of $162 million, a sharp 79% decline from the $775 million last year.

Foreign investors placed $873 million in equity capital but also took out $711 million. In 2012, they infused $797 million and withdrew just $22 million.

The bulk of equity capital investments originated from Mexico, Malaysia, the Netherlands, the United States and Japan.

The sizeable withdrawals in equity capital, the BSP said, were due to the “transfer of ownership of shares in a local manufacturing company, from one non-resident to another non-resident investor”.

Last January 25, Mexican beverage firm Coca-Cola FEMSA completed its purchase of a 51% stake in Coca-Cola Bottlers Philippines, Inc. for P688.50 million.

Reinvested earnings, meanwhile, added a net $85 million to January FDI, down 9.6% from a year earlier.

“Foreign investors opted to retain their earnings locally on expectations of continued strong corporate performance,” the BSP said.

Debt instruments, lastly, contributed a net inflow of $329 million in January, a 78.8% jump from a year earlier. These included borrowings between investors and enterprises through loans and securities, or inter-company borrowing between investors and their subsidiaries and affiliates.

The central bank expects FDI to hit a net $2.2 billion this year. The 2012 result was a net $2.033 billion, up a tenth from a year earlier and surpassing the forecast of $1.5 billion. — D. C. J. Jiao, Businessworld

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