FDI inflows down 45% in August —BSP

Foreign direct investment (FDI) recorded a double-digit decline in August versus the same period last year, data released by the Bangko Sentral ng Pilipinas (BSP) on Monday showed.

FDI registered a net inflow of $416 million, down from $758 million in 2018.

“The ongoing uncertainty in the global environment continued to dampen investor sentiment, which caused postponements in investment plans,” the BSP said.

“Bulk of the FDI net inflows for the month were in the form of investments in debt instruments which reached $263 million,” the central bank said in an accompanying statement.

University of Asia and the Pacific (UA&P) School of Economics Dean Cid Terosa told GMA News Online the latest BSP numbers were a reflection of market expectations due to US-China trade dispute.

“The pesky trade war between the USA and China coupled with overall weak global economic outlook have made investors cautious and conservative,” he said in a text message.

“In times like these, developing countries like the Philippines are most likely to feel investor lethargy and investment malaise because they are deemed riskier options,” Terosa emphasized.

Debt instruments consisted mainly of intercompany borrowings, and lending between foreign direct investors and their subsidiaries and affiliates in the Philippines, the central bank noted.

Net equity capital investments also dropped 55.3% to $77 million from $172 million.

“Equity capital placements during the period came mostly from Japan, the United States, Hong Kong, Cayman Islands, and Singapore,” said the BSP.

Investments were then channeled mainly into manufacturing, real estate, financial and insurance, information and communication, and wholesale and retail trade industries.

On a cumulative basis, FDI recorded net inflows of $4.5 billion in January to August, reflecting a 39.7% decrease from $7.5 billion.

Most of the placements during the eight-month period were sourced from Japan, the United States, Singapore, China, and South Korea.

The drop in FDIs is likely to continue in the months after August.

“Unless the haze caused by global trade tension and economic weakness is blown away, the flow of investments worldwide will be slow,” Terosa said. —Jon Viktor Cabuenas/VDS, GMA News