February surge fails to lift long term investments into PH dip in first two months

by Daxim L. Lucas, Philippine Daily Inquirer, May 10, 2019

February surge fails to lift long term investments into PH dip in first two months

MANILA, Philippines — A surge of long term equity inflows in February failed to reverse a weak start for investments into the Philippines as fewer multinational firms sent funds to their local units coupled with an increase in capital withdrawals, the central bank said Friday.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said that total foreign direct investments reached $1.4 billion in the January-February period – lower by 15.7 percent than the $1.6 billion net inflows registered in the comparable period last year.

“The decrease in FDI net inflows during the period was due mainly to the 67.1 percent decline in non-residents’ net equity capital investments as placements decreased by 31.5 percent, while withdrawals grew by 236.5 percent,” the central bank said.

Equity capital placements during the period came mostly from Japan, China, South Korea, Mauritius, and the United States.

By economic activity, equity capital infusions were mainly invested in financial and insurance services; transportation and storage; real estate; administrative and support services; and manufacturing industries.

Meanwhile, net placements in debt instruments increased by 12.9 percent to $1 billion from $896 million in the first two months of 2018. Reinvestment of earnings grew by 10.1 percent to $155 million during the period.

Total foreign direct investments for all of 2018 reached $9.8 billion, which represented a 4.4 percent decline from the $10.3 billion recorded in the previous year.

For the month of February alone, foreign direct investments net inflows rose by 20.2 percent to $746 million from the $621 million posted in the same period last year.

“Investment inflows continued as investors remain confident in the Philippine economy on the back of strong economic growth prospects and sound macroeconomic fundamentals,” the central bank said.

Net equity capital investments contributed largely to the increase in FDI net inflows during the period, expanding by 141.7 percent to $233 million from $96 million in February 2018.

This was due to the 126.3 percent increase in equity capital placements to $258 million that were sourced mainly from Japan, China, the United States, Singapore and Switzerland.

Equity capital investments for February were channeled primarily to transportation and storage; financial and insurance services; manufacturing; real estate; and professional, scientific and technical industries.

Likewise, reinvestment of earnings grew by 13.7 percent to $79 million from $69 million in the same month a year ago.

Non-residents’ placements in debt instruments issued by local affiliates or intercompany borrowings recorded lower net inflows of $435 million from $455 million in February 2018.