FDI inflows rise 26% to $611 million

In March

MANILA, Philippines —  Foreign direct investment (FDI) net inflows climbed to $611 million in March from a year earlier, driven by higher investments across equity capital, reinvested earnings and debt instruments, according to the Bangko Sentral ng Pilipinas. Preliminary data from the BSP showed that FDI net inflows increased by 26 percent to $611 million in March from $485 million in the same month last year.

Despite the annual increase, the March tally was lower than the $638-million net inflow recorded in February, making it the lowest in two months or since the $469 million in January.

The BSP said nonresidents continued to invest in the country, with foreign equity and reinvested earnings remaining “broadly steady, indicating continued investors’ confidence in the country.”

The increase in March FDI was mainly supported by a 62.7-percent rise in nonresidents’ net investments in equity capital other than reinvestment of earnings to $166 million from $102 million a year ago.

Equity capital placements grew by 25.7 percent to $186 million in March from $148 million, while withdrawals declined by 56.5 percent to $20 million from $46 million.

The BSP said equity capital placements from January to March  came primarily from Japan, the United States and Singapore. These were largely channeled into the manufacturing, financial and insurance and real estate industries.

Reinvestment of earnings also went up by 25.8 percent to $78 million in March from $62 million a year earlier. Likewise, nonresidents’ net investments in debt instruments rose by 14.6 percent to $368 million from $321 million.

Net investments in debt instruments consist mainly of intercompany borrowing and lending between foreign direct investors and their subsidiaries or affiliates in the Philippines.

The BSP’s FDI data cover actual investment inflows, unlike the approved foreign investments reported by other government agencies, which represent investment commitments that may not be fully realized.

For the first quarter, however, FDI net inflows fell by 16.9 percent to $1.72 billion from $2.07 billion in the same period last year.

The decline in the three – month tally was largely due to lower nonresidents’ net investments in debt instruments, which dropped by 22.4 percent to $1.18 billion from $1.52 billion.

Reinvestment of earnings also slipped by 17.9 percent to $206 million from $251 million. This offset the 13.1-percent increase in net equity capital investments, which rose to $337 million in the first quarter from $298 million a year ago.

SM Investments Corp. group economist Robert Dan Roces said the lower March FDI level compared with February, along with the weaker first-quarter tally, suggests that investors have turned more cautious amid global uncertainty rather than pointing to a sharp deterioration in sentiment toward the Philippines.

Roces said FDI inflows tend to be uneven from month to month, as a few delayed or postponed projects can have a noticeable impact on the data.

“Moving forward, inflows may gradually pick up if and when financing conditions improve, but competition for investment remains strong, making execution, policy stability and infrastructure delivery increasingly important in turning interest into actual investments,” said.