FOREIGN investors looking for long-term yield in the Philippines were less eager to bet their money in the country in August, the Bangko Sentral ng Pilipinas (BSP) reported on Monday.
Latest data showed foreign direct investments to the Philippines hit $752 million in August this year, declining 41.2 percent from the $1.28-billion FDI net inflows in the same month last year.
It is also a deceleration from the $914-million net inflow in the previous month and the third-lowest monthly inflow for the year.
FDI is the type of investment that is often more coveted, as it stays longer in the economy and creates job opportunities for locals. It is also not easily pulled out of the market unlike its shorter-term counterpart, the foreign portfolio investments.
The BSP said investments were thin during the month, as even as all FDI components registered positive balances, inflows were lower than the levels posted in August 2017.
Bulk of the FDI inflows for the month was in the form of investments in debt instruments. This consisted mainly of intercompany borrowings/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines.
Investments in debt instruments reached $534 million during the month.
Meanwhile, net equity capital investments declined to $172 million from $652 million in the same month last year, as gross placements continued to outweigh withdrawals.
These equity capital infusions came mostly from Singapore, the United States, Japan, Hong Kong and China.
The BSP said they were invested mainly into firms engaged in manufacturing, real estate, electricity, gas, steam and air-conditioning supply, information and communication, and financial and insurance activities.
Reinvestment of earnings totaled $47 million during the month.
For the first eight months of 2018, FDI net inflows reached $7.4 billion, 31 percent higher than the $5.7 billion seen in the same January-to- August period in 2018.
“FDI inflows remained strong amid continued favorable investor sentiment on the Philippine economy on the back of the country’s strong macroeconomic fundamentals and growth prospects,” the BSP said.
The BSP pegged the FDI projection for the entire year at $9.2 billion.
This means that the country must be able to attract at least $1.8 billion more FDI—or about $450 net inflows each month for the rest of the year—to reach this benchmark.