Foreign direct investments drop 43% in April – BSP

The inflow of foreign direct investments to the Philippines in April, despite remaining positive, declined 43 percent largely because of lower placements in debt instruments.

Investments from non-residents amounted to $382 million during the month, compared to the $671 million reported in the comparable 2014 period, the Bangko Sentral ng Pilipinas (BSP) said Friday.

Net equity capital investments increased 120.8 percent to $25 million from $11 million, as placements of $39 million exceeded withdrawals of $14 million during the month, according to the central bank.

The equity capital investments came largely from the US, the UK, Hong Kong, Germany and Luxembourg. These were mostly channeled to real estate, manufacturing, administrative and support service, financial and insurance, and wholesale and retail trade activities.

The reinvestment of earnings also increased 3.4 percent to $81 million from $78 million. These comprise direct investors' share of earnings that local subsidiaries and associates do not distribute as dividends.

But the higher net equity capital investments and reinvestment of earnings were offset by a 52.5 percent decline to $276 million of net placements in debt instruments like loans, debt securities, financial leases, and trade credits and advances.

Foreign direct investments totaled $1.2 billion from January to April, barely half of the 2.4 billion recorded during the same period in 2014 because of lower year-to-date investments in equity capital and debt instruments.

Market watchers and investment managers like Jones LaSalle have forecast slowing foreign direct investment in the Philippines ahead of the 2016 elections.

The leadership change, in addition to existing structural and governance issues, will supposedly keep foreign investors on the sidelines to minimize risk and gauge the political climate. — DVM, GMA News