Net inflows of foreign direct investments hit its highest level in two months in March, but remained smaller than those posted a year earlier on the back of the lingering effects of the coronavirus disease 2019 (Covid-19) pandemic on investment appetite, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
Central bank data showed that March inflows declined by 18.5 percent to $507 million from $622 million in the same month last year, but improved on February’s $505 million and was the widest since January’s P657 million.
It dragged the first-quarter tally to $1.66 billion, 14.2 percent lower year-on-year.
“The progression of the Covid-19 crisis into a full-scale pandemic and its adverse impact on the global economy dampened investor sentiment and investment activity during the month,” the BSP explained.
It attributed the decline in inflows in March largely to the 33.5-percent decrease in net investments in debt instruments to $278 million from $419 million in the same month last year.
Also, reinvestment of earnings dropped by 37.9 percent to $57 million from $91 million.
Net equity capital placements expanded by 53.1 percent to $172 million in the third month from $112 million year-on-year, despite $196 million in equity capital placements more than offsetting withdrawals worth $24 million.
Infusions in March were traced largely from Japan and Taiwan. These were channeled mainly to the administrative and support service, manufacturing, and financial and insurance industries.
The Bangko Sentral attributed the dip in net FDI inflows in the first three months to the 41-percent dive in intercompany borrowing to $828 million from $1.4 billion a year earlier.
Similarly, reinvested earnings fell by 24.1 percent to $187 million from $247 million year on-year.
But the BSP said the year-to-date downturn was mitigated partly by the 120.7-percent increase in net equity capital placements to $653 million from $296 million.
In particular, gross placements surged by 22.8 percent to $714 million from $582 million, while withdrawals plunged by 78.6 percent to $61 million from $286 million.
Equity capital infusions in the three months ending March came mainly from The Netherlands, Japan and Singapore. These were invested manufacturing, administrative and support service, and real estate industries.
The central bank expects these jobs-generating investments to hit $4.1 billion this year, smaller than its previous estimate of $8.2 billion.
Last year, net FDI inflows sank to a four-year low of $7.64 billion on the back of dampened investor sentiment because of global uncertainties.