Net FDI plunges 46% to 8-mth low in Feb

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Net foreign direct investment (FDI) inflows to the Philippines plunged 46 percent in February from the preceding month and hit its lowest level in eight months, central bank data showed on Wednesday.

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Despite a 7 percent rise from a year-earlier, net FDI inflows dropped to $366 million in February from $685 million in January this year.

The amount of net FDI inflows in February was the lowest since June 2016, when it registered $238 million.
The Bangko Sentral ng Pilipinas (BSP) did not provide an explanation for the slump in February, focusing more on the 7 percent increase year-on-year.

7% rise yr-on-yr

Net FDI in February showed a 7 percent increase from $342 million a year earlier, and the BSP said that was because inflows in intercompany borrowings and reinvested earnings more than offset the decline in net equity capital.

Net equity capital infusion stood at $45 million, lower by 75.4 percent than $185 million recorded a year earlier, the BSP said.

In gross terms, equity capital placements of $79 million more than offset the $33 million withdrawals.

The bulk, or 84.3 percent, of gross equity capital investment was sourced to Japan, Hong Kong and the United States, the BSP said.

Placements were channeled primarily to wholesale and retail trade; real estate; manufacturing; financial and insurance; and art, entertainment and recreation activities.

The data showed that more than offsetting the decline in equity capital were inflows in debt instruments and reinvested earnings.

More than two-thirds of FDI net inflows were in the form of non-residents’ placements in debt instruments issued by local affiliates, or intercompany borrowings, which grew 160.7 percent to $255 million from $98 million the previous year.

Meanwhile, earnings reinvestment increased 11.3 percent to $66 million from $59 million in February 2016.

Cumulative tally

For the January-February 2016 period, net cumulative FDI inflows registered an 11 percent year-on-year increase to $1.05 billion.

“Investment inflows continued as investors remain[ed]confident in the Philippine economy on the back of strong macroeconomic fundamentals,” the BSP said in the statement that came with the numbers.

Net placements in debt instruments expanded by 133.2 percent to $821 million from $352 million in the comparable period last year.

Equity capital investments recorded net inflows of $93 million, as equity capital placements reached $142 million while withdrawals amounted to only $49 million.

Placements during the period came mostly from Japan, Hong Kong, the United States, Germany and Singapore. These were largely invested in real estate, wholesale and retail trade, financial and insurance, information and communication, and manufacturing activities.

Reinvestment of earnings for the first two months of 2017 reached $137 million, up by 3.3 percent from the year-earlier level.

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