LONG-TERM investments made by foreign players declined in the first quarter of the year, as a significant chunk of investment withdrawals were seen early in 2019, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.
The Central Bank on Monday reported a 15-percent drop in the country’s foreign direct investment (FDI) numbers in the January-to- March period of this year. In particular, while FDI still amounted to a net inflow of $1.94 billion in the first quarter of 2019, it is significantly lower than the $2.29 billion seen in the same period in 2018.
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 usually an indicator of long-term sentiment of the global community on the Philippines’s economic dynamics, as FDI are not easily pulled out of the market, unlike their shorter-term counterpart, the foreign portfolio investments.
The BSP said that during the quarter, both placements and withdrawals were affected, resulting in the double-digit decline.
Actual equity capital placements declined to $568 million from $996 million, posting a 42.9-percent decline from 2018 to 2019. This was coupled with a rise in the investors’ equity withdrawals for the period, increasing to $273 million.
This is about 150 percent higher than the $109 million seen in the same period last year.
Equity capital infusions during the period emanated mainly from Japan, China, the United States, Singapore and South Korea.
According to the BSP, these were channeled largely to the financial and insurance, real estate, transportation and storage, manufacturing, and administrative and support service industries.
On the other hand, other components of the FDI registered improvements in the first quarter of the year compared to that of 2018.
In particular, net investments in debt instruments rose by 18.6 percent to $1.4 billion from $1.2 billion in the same quarter in 2018. Reinvestment of earnings increased by 11.3 percent to $234 million during the quarter from $211 million in the comparable period last year.
For March alone, FDI hit $586-million net inflows, lower by 13.9 percent than the $681-million net inflows registered in the comparable period last year.
This developed on account of the decline in net equity capital investments, as placements dropped to $126 million from $351 million in March 2018.
Meanwhile, nonresidents’ investments in debt instruments (consisting mainly of loans extended by parent companies abroad to their local affiliates) recorded an increase of 35.8 percent to $399 million, from $294 million last year.
Reinvestment of earnings increased by 14.4 percent to $80 million during the period, from $70 million a year ago.