Foreign direct investments (FDI) in so-called bricks-and-mortar enterprises in the Philippines continued to grow in the first six months this year although at a slower pace compared to a year ago, the Bangko Sentral ng Pilipinas said on Tuesday.
These are foreign capital directly injected into businesses that help generate tax for the state coffers and employment opportunities for Filipinos and contrasts sharply against portfolio or “hot money” which are easily withdrawn and transferred to so-called safe havens at the mere hint of trouble or promise of greater rewards elsewhere.
The Bangko Sentral ng Pilipinas (BSP) on Tuesday reported January to June FDI this year equivalent to P3.57 trillion, representing a 38.8 percent decline from P5.84 trillion in the first half of 2018.
“This resulted as net equity capital investments declined to $361 million from $1.6 billion as placements dipped by 50.8 percent to $860 million from $1.7 billion and withdrawals increased by 206.6 percent to $499 million from $163 million,” the BSP said.
“Equity capital placements during the period were sourced largely from Japan, the United States, Singapore, China and South Korea,” it added.
For the month of June alone, FDI posted net inflows of $430 million, 48.5 percent lower than the recorded $836 million in the same month last year.
According to the central bank, the slowdown was traced to the 50.8 percent drop in equity placements as withdrawals for the month accelerated 105.3 percent.
Equity placements in June 2019 totaled only $73 million versus the year ago placement of $208 million.
Equity withdrawals, on the other hand, accelerated to $49 million versus the year ago figure of only $24 million.
By country origin, bulk of foreign investments came from the United States, Singapore, Netherlands, China and Japan. These were heavily invested in financial and insurance, real estate, manufacturing, electricity, gas, steam, air-conditioning supply and construction industries.
“Meanwhile, non-residents’ investments in debt instruments registered lower net inflows of $317 million from $570 million,” the BSP said.
“Reinvestment of earnings expanded by 8.3 percent to $89 million from $82 million in the same month last year,” it added.
Earlier, the BSP downgraded its target FDI this year to only $9 billion from $10.2 billion given such external risks and dampeners as the ongoing trade tension between the US and China.