FDI inflow plunges 40% to $2 B in H1

MANILA, Philippines - Foreign direct investments (FDIs) in the Philippines plunged 40 percent from January to June due to uncertainties brought about by the impending interest rate hike by the US Federal Reserve, weak global economy, and the stock market collapse in China.

The Bangko Sentral ng Pilipinas (BSP) reported yesterday FDI inflows amounted to $2.02 billion in the first half, $1.35 billion lower compared to $3.37 billion in the same period last year.

According to the BSP data, equity and investment fund shares retreated 10.8 percent to $1.04 billion from January to June, compared to $1.16 billion in the same period last year.

Equity placements fell 23.8 percent to $858 million from $1.12 billion, while withdrawals plunged 52.9 percent to $204 million from $433 million.

The central bank said equity capital placements came mainly from the US, Germany, Japan, Singapore, and the United Kingdom.

Equity placements were channeled primarily to manufacturing; financial and insurance; real estate; electricity, gas, steam and air conditioning supply; and wholesale and retail trade activities.

On the other hand, earnings of foreign companies operating in the Philippines and plowed right back into the country declined 11.6 percent to $385 million in the first semester from $471 million a year ago.

Likewise, non-residents’ net investments in debt instruments including net intercompany borrowings plunged 55.6 percent to $981 million from $2.21 billion.

For June alone, the BSP reported that FDIs reached $383 million, 31 percent lower compared to $554 million in the same month last year.

Equity placements coming from the US, Singapore, Germany, Japan, and Taiwan surged 293.5 percent to $308 million in June from $78 million in the same month last year.

However, withdrawals also jumped 288.2 percent to $94 million from $24 million.

On the other hand, reinvestment of earnings decreased 11.6 percent to $67 million from $76 million, while investments in debt instruments or lending by parent companies abroad to their local affiliates to fund expansion plunged 76 percent to $102 million from $424 million.