Foreign direct investments down 18.5% to $507M net inflow in March

Foreign direct investments (FDI)—investments made by foreign companies or individuals in the Philippines—stood at a net inflow, albeit lower, in March as the full impact of the COVID-19 pandemic took a toll on investor sentiment, according to data released by the Bangko Sentral ng Pilipinas (BSP) on Friday.

Central bank data showed the March 2020 FDI was recorded at a net inflow of $507 million. This, however, is 18.5% lower than the $622-million net inflow booked in March 2019.

“The progression of the COVID-19 crisis into a full-scale pandemic and its adverse impact on the global economy dampened investor sentiment and investment activity during the month,” the BSP said.

The decline in total FDI net inflows was largely attributed to the 33.5% reduction in net investments in debt instruments to $278 million from $419 million in the same month last year.

Reinvestment of earnings also fell by 37.9% to $57 million from $91 million.

Meanwhile, net equity capital placements increased by 53.1% to $172 million in March from $112 million year-on-year.

Equity capital placements originated mostly from Japan and Taiwan.

These were invested mainly in the administrative and support service, manufacturing, and financial and insurance industries, according to the BSP.

In the first quarter, FDI net inflows also saw a contraction of 14.2% to $1.7 billion from the $1.9 billion net inflows in the same period last year.

“This developed on account of the 41% decline in net investments in debt instruments to $828 million from $1.4 billion. Likewise, reinvestment of earnings dipped by 24.1% to $187 million from $247 million in the previous year,” the BSP said.

The central bank said FDI downturn was mitigated partly by the 120.7% growth in net equity capital placements to $653 million from $296 million.

In particular, gross placements expanded by 22.8% to $714 million from $582 million and withdrawals decreased by 78.6% to $61 million from $286 million.

A bulk of the equity capital placements during the period was from the Netherlands, Japan, and Singapore.

The said placements were channeled mainly to the manufacturing, administrative and support service, and real estate industries, the BSP said. -MDM, GMA News