FOREIGN direct investment (FDI) in the Philippines dropped 6.8 percent year-on-year in May as non-residents continued to show diminishing net placements in debt instruments and reinvested earnings, but the fall marked a substantial deceleration from the 43 percent plunge recorded in April, official data showed on Monday.
FDI in May stood at $403 million, down from $433 million posted in the same month last year, according to data released by the Bangko Sentral ng Pilipinas (BSP).
Cumulative FDI in the first five months of the year still showed a sharp drop, down 41.9 percent at $1.6 billion from $2.8 billion a year earlier.
April to May improvement
Measured at the net level in May alone, FDI flows actually rose 5.5 percent from the net level of $382 million in April.
By component, intercompany borrowings or nonresidents’ net placements in debt instruments issued by local affiliates recorded the biggest decline of 35.6 percent in May, as inflows dropped to $191 million from $296 million a year earlier.
Reinvested earnings fell 15.6 percent to $52 million in the month from $62 million a year earlier.
But offsetting the declines were inflows into equity capital, which rose by 115 percent to $160 million from $75 million.
Placements in these investments reached $181 million, exceeding withdrawals that amounted to $20 million during the month.
Most of the equity capital investment originated from the United States, Germany, Japan, Singapore and Taiwan, and were channeled mainly to financial and insurance sectors; wholesale and retail trade; real estate; manufacturing; and administrative and support service activities, the BSP said.
For the five months to May, intercompany borrowings slumped 50.7 percent to $879 million from $1.8 billion.
Cumulative reinvested earnings dropped 19.6 percent to $318 million from $396 million a year earlier.
Net equity capital placements reached a cumulative $440 million as gross placements of $550 million more than offset withdrawals of $110 million during the period.
The central bank expects FDI net inflow to reach $6 billion by the end of the entire year.