Foreign direct investments up 182.7% in June – BSP


H1 net FDI down 14%

Foreign direct investments (FDI) nearly tripled in June but year to date were lower compared to the first half of 2016, the Bangko Sentral ng Pilipinas (BSP) reported on Monday.

At $674 million, the net inflow for the month was 182.7 percent higher compared to June last year, also growing by 18.6 percent from May’s $568 million.

The Bangko Sentral said this reflected the “continued bullish outlook” of investors in the Philippines.

Investments in debt instruments, or lending by parent companies abroad to local affiliates, accounted for the June result with inflows reaching $647 million, up 270 percent from last year.

Reinvested earnings, meanwhile, grew by 16.5 percent to $72 million.

Equity capital, on the other hand, saw outflows increase to $72 million from $5 million last year. June’s $113 million in withdrawals outpaced the $185 million in recorded placements.

The bulk of inflows came from the United States, Japan, Taiwan, Singapore and India, the central bank said.

Placements were channeled primarily into real estate; electricity, gas, steam and air conditioning supply; financial and insurance; manufacturing; and professional, scientific, and technical activities.

Lower YTD

Despite June’s 182.7 percent growth, net FDI flows for the first half were 14 percent lower year on year at $3.59 billion.

The Bangko Sentral said this was on account of a 90.3 percent decline in net equity capital to $141 million.

Placements during the period came mostly from the United States, Japan, Singapore, Hong Kong and Taiwan.
Net placements in debt instruments expanded by 29.2 percent to $3.04 billion from $2.35 billion.

Reinvested earnings reached $416 million, up 9 percent.

The Bangko Sentral raised its 2017 net FDI forecast to $8 billion in June, from $7 billion previously, given improved domestic indicators and expected global uptick.

Political risk

IHS Markit Asia-Pacific chief economist Rajiv Biswas said the 14 percent decline in first half net FDI could be attributed to political risks.

“The increased political risk perceived by global investors related to the Mindanao insurgency and the protracted battle for Marawi City has been one of the significant factors that has dampened FDI inflows in 2017,” he said.

However, Biswas said the medium term outlook for FDI inflows remained favorable, boosted by strong economic growth and rapidly rising household incomes.


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