August FDI still down

The deceleration reflects the ongoing uncertainty in the global environment, which continues to dampen investor sentiment.

Although foreign equity placements continue to flow inward, its pace is slow, resulting to an aggregate far off its target.

Latest data from the Bangko Sentral ng Pilipinas (BSP) show foreign direct investments (FDI) in the first eight months totaling only $4.53 billion, nearly 40 percent lower than the $7.52 billion in the same period year-ago.

“The decline in FDl resulted from the contraction in non-residents’ net investments in debt instruments by 32.5 percent to $3.3 billion (from $4.9 billion) and equity capital by 73.4 percent to $536 million (from $2 billion),” BSP Governor Benjamin Diokno said.

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

According to the central bank, the deceleration reflects the ongoing uncertainty in the global environment, which continues to dampen investor sentiment.

In August alone, FDI showed a net inflow of only $416 million, a 45.1 percent decline from $758 million in August 2018.

The slowdown in foreign investments during the month was owed to the 53.9 percent decline in foreign equity placements, offsetting the 38 percent drop in foreign equity withdrawals.

Equity placements in August totaled $86 million versus $187 million in August 2018.

Equity withdrawals meanwhile, reached $10 million, an improvement from the registered $16 million in the same comparable period.

By country source, bulk of foreign investments came from Japan, the United States, Hong Kong, Cayman Islands and Singapore. These were heavily placed on manufacturing, real estate, financial and insurance, information and communication and wholesale and retail trade industries.

Earlier, the BSP projected FDI this year totaling $9 billion. Diokno said that target remains achievable.

The BSP chief earlier said some policy assurance, particularly on the fate of the Comprehensive Tax Reform’s second package (CTRP), would help in boosting more foreign investments down the line.

“FDI slowdown might have been caused by the (CTRP’s) second package, the uncertainty on how the second package will look like… Investors were in a wait-and-see mode,” Diokno said.