Foreign direct investments continue to slump in March on lingering caution

The country continued to suffer from an outflow of foreign direct investment (FDI) in March, the Bangko Sentral ng Pilipinas (BSP) said Wednesday.

In a statement, the BSP said FDI posted a net outflow of $27 million in March, reflecting a year-on-year slump of 118.1 percent compared with $149 million in inflows in the same month last year.

This led the first-quarter tally to reach net inflows of $44 million this year, or 83.5 percent lower than the $266 million last year.

“Contributing to the first quarter net inflows were the positive balances registered in equity capital and reinvested earnings which more than offset the net outflow in other capital,” the BSP said.

The central bank projected net FDI inflows to reach $700 million this year.

The BSP said the country remained a recipient of equity capital even as investors remained cautious given the global economic slowdown.

This was reflected in the 79.4 percent drop in equity capital to $47 million at end-March from $228 million last year.

Equity capital inflows were channeled to the manufacturing, real estate, financial intermediation, and trade/commerce sectors. These were mostly by investors from Japan and the US.

Reinvested earnings also posted a net inflow of $47 million, a reversal of the $249-million net outflow recorded during the same quarter last year.

“Investors opted to retain earnings/profits in local banks and enterprises as the country showed signs of stabilization in the midst of the global financial crisis and economic downturn,” the BSP said.

The other capital account, consisting largely of inter-company borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines, reversed to a net outflow of $50 million as a result of inter-company loan repayments and trade credits extended to affiliates abroad. — Maricel E. Burgonio, Manila Times