FDI inflow weakens

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In August, long-term equity investments in the Philippines fell sharply and declined nearly as much in the first eight months of the year as global economic uncertainties dampened the sentiment of foreign businessmen towards the country, the central bank said.

Foreign Direct Investments (FDIs) posted a net inflow of $416 million in August 2019, 45.1 percent lower than last year’s net inflow of $758 million, according to the Bangko Sentral ng Pilipinas.

The bulk of the month’s net investment inflow was in the form of debt tool investments ā€” mainly intercompany borrowing or lending between foreign direct investors and their Philippine subsidiaries or affiliates ā€” which reached $263 million compared to $534 million last year in the same span.

Non-resident net equity investments fell from $172 million in the same month last year by 55.3 percent to $77 million as the decrease in investments from $187 million to $86 million outweighed the decline in withdrawals from $16 million to $10 million. Over the era, equity capital investments came mostly from Japan, the U.S., Hong Kong, the Cayman Islands, and Singapore. Such funds are channeled mainly to manufacturing, real estate, finance and insurance, information and communication, and wholesale and retail industries.

Earnings reinvestment expanded from $53 million in the same month last year by 46 percent to $77 million.

For the January-August 2019 period, net FDI inflow of $4.5 billion was recorded on a cumulative basis, down 39.7 percent from last year’s net inflow of $7.5 billion.

The continuing global environment volatility continued to dampen investor sentiment, causing investment plans to be postponed,” said the central bank.

This added that the fall in FDIs resulted in 32.5 percent to $3.3 billion from $4.9 billion and 73.4 percent to $2 billion from net investment in debt instruments by non-residents.Net equity investments fell as investments dropped from $2.2 billion by 49.6 percent to $1.1 billion, coupled with the 195.6 percent increase in withdrawals from $196 million to $578 million.

Over time, equity capital investments came mainly from Japan, the U.S., Singapore, China, and South Korea.

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