Bangko Sentral: Q1 foreign direct investments down 8.5%

Published June 10, 2013 4:04pm

(Updated 7:19 p.m.) Lower equity capital investments fell in the first quarter of the year, causing foreign direct investments (FDI) to sag by 8.5 percent from a year earlier, Bangko Sentral ng Pilipinas reported Monday.

FDI in January to March eased to $1.3 billion from $1.4 billion year-on-year, Bangko Sentral data showed.

Bank of the Philippine Islands economist Nicholas Antonio Mapa noted the latest FDI figures are a “damper on business sentiment.”

Even as the country's 7.8 percent gross domestic product growth overtook Southeast Asian peers in the first quarter, he said Philippine FDI is still the lowest in the region. “It pales in comparison with Indonesia's $6.5 billion FDI in the first quarter,” Mapa said.

Indonesia was the second fastest growing Southeast Asian economy in the first quarter, expanding by 6 percent.

“Unless there's an influx of FDIs, the country's growth will remain driven by consumption,” Mapa noted.

“What could really help our economy move up the ladder is FDIs, especially in manufacturing and agriculture,” the economist added.

“By FDI component, gross equity capital placement aggregated $1.5 billion, higher by 49.4 percent than its year-ago level of $1 billion,” the central bank noted in a separate statement.

“The bulk of these equity capital investments—which came from Mexico, Japan, Malaysia and the US—were channeled to manufacturing, water supply, sewerage, waste management and remediation activities, as well as financial and insurance activities, and arts, entertainment and recreation, and real estate,” the regulator added.

The placements were partially offset by $799 million in withdrawals, that the net infusion of equity capital reached only $729 million.

“Reinvestment of earnings reached $196 million in the first quarter, as foreign investors opted to hold their earnings in local corporations due to favorable domestic economic prospects, Bangko Sentral noted.

“This was lower, however, by 26.3 percent relative to the year-ago level of $266 million,” it added.

In March alone, FDI registered net outflows of $78 million—a reversal of the $179 million in net inflows a year earlier. Investments in equity capital recorded net outflows of $17 million because of lower equity capital placements and higher withdrawals.

Investments in debt instruments registered net outflows of $112 million, largely on account of remittance of profits by local branches of foreign banks to their head offices abroad, Bangko Sentral noted.

“These developments more than offset the net inflows recorded in the reinvestment of earnings account amounting to $51 million,” the central bank added. — Siegfrid Alegado/VS, GMA News

Tags: investments, fdi, foreigndirectinvestments, bangkosentral