Foreign investment inflows drop 40.9% in June — BSP

Net inflows of foreign direct investments (FDI) totaled $238 million in June, down 40.9 percent from $404 million a year earlier, the Bangko Sentral ng Pilipinas (BSP) said Tuesday.

FDI is a key source of jobs and capital for the economy.

"I think the decline is just because of timing. Most of these investments arrived in April 2016, which coincidentally came after the BOJ (Bank of Japan) and the ECB (European Central Bank) announced more easing early this year," Guian Angelo Dumalagan, market economist at the Land Bank of the Philippines, told GMA News Online.

"With April's all-time high of $2.2 billion, it would be unreasonable to expect a continued robust growth in FDI. I believe FDI expansion would naturally moderate and normalize, but it would still generally show an upward trend," Dumalagan added.

In April, FDI inflows of $2.2 billion were nearly six times more than the $382 million recorded a year earlier.

The bulk or $182 million of inflows in June was in the form of debt instruments, which rose by 49.4 percent from $122 million, the BSP said.

Reinvested earnings amounted to $62 million, down 7.8 percent.

Equity capital placements of $36 million compared with $41 million of withdrawals, resulting in net outflows of $5 million from net inflows of $215 million year-on-year, according to the BSP.

"The decline in net FDI inflows in June is due largely to lower equity capital placement during the month," BSP Deputy Governor for Monetary Stability Sector Diwa Guinigundo said in a separate text message.

Guinigundo noted that investor confidence in the economy remains high as higher investments in debt instruments or inter-company borrowings were realized, which more than offset the decline in capital flows.

Most of the inflows came from Japan, US, Singapore, Hong Kong, and China. Equity capital was mainly placed into real estate; electricity, gas, steam, and air conditioning supply; information and communication; wholesale and retail trade; and manufacturing activities.

H1 FDI up 94.9%

In the first half of the year, FDI net inflows totaled $4.2 billion, up 94.9 percent from $2.2 billion in the first six months of last year.

The surge in the first half was a reflection of investors' confidence in the Philippine economy on the back of sound macroeconomic fundamentals and robust growth, according to the central bank.

"Many foreign investors have brought their investments into the Philippines due to the country's upbeat business and consumer conditions, which received some added support from election-related spending," Dumalagan noted.

"Consistent with this trend, the majority of European businesses foresee an expansion in their operations in Southeast Asia this year, as the region in general remain as a bright spot in a weak global economy," he added. — VDS/BM, GMA News