FDI well below target

The slow pace of foreign investments during the month was traced to the 39.6 percent drop in foreign equity placements as withdrawals accelerated 302.4 percent.

Greater withdrawals than placements in foreign direct investments were reported over seven months this year that resulted to below-target FDI totaling only $4.1 billion.

Foreign equity placements in the first seven months continue to pour inward but their entry has slowed by a hefty 75 percent, the Bangko Sentral ng Pilipinas (BSP) said on Friday.

Data show foreign direct investments (FDI) from January to July this year stood at $4.11 billion, a 39.1 percent decline from $6.76 billion a year ago.

“This stemmed from the decline in non-residents’ net investments in equity capital by 75.1 percent to $459 million (from $1.8 billion) and in debt instruments by 30.3 percent to $3.1 billion (from US$4.4 billion),” the central bank said.

“Equity capital placements during the period emanated largely from Japan, the United States, Singapore, China and South Korea,” it added.

According to the central bank, the deceleration reflects the impact of the weak pace of global economic activity that took its toll on investor business confidence and investment decisions globally.

For the month of July alone, FDI posted net inflows of only $543 million, 41.4 percent lower than foreign investments of $926 million in the same month a year earlier.

The slow pace of foreign investments during the month was traced to the 39.6 percent drop in foreign equity placements as withdrawals accelerated 302.4 percent.

Equity placements in July totaled $168 million versus $$278 million in July 2018.

Equity withdrawals on the other hand, reached $69 million, significantly higher than the $17 million for the comparable period.

By country origin, bulk of foreign investments came from Japan, Germany, Singapore, the United States and South Korea. These were placed heavily on financial and insurance, real estate, manufacturing and human health and social work industries.

“Non-residents’ net investments in debt instruments posted $357 million while non-residents’ net investments in equity capital amounted to US$99 million during the period,” the BSP said.

“On the latter, the level was lower compared to that posted a year ago due to the decrease in equity capital placements by 39.6 percent, to $168 million (from $278 million) and expansion of equity capital withdrawals by 302.4 percent, to $69 million (from $17 million),” it added.

Previously, BSP Governor Benjamin Diokno said the $9 billion FDI target set for the year remains achievable.