FDI inflows up 35% in July, says BSP

Foreign direct investments (FDIs) posted double-digit growth in July on the back of higher borrowings between investors overseas and their affiliates in the Philippines, the Bangko Sentral ng Pilipinas (BSP) reported Monday.

Data released by the central bank showed that FDIs grew by 35.2% to $797 million in July versus the $590 million the same month last year, marking the third consecutive month of year-on-year growth.

FDI includes investment by non-resident direct investors with an equity capital of at least 10% in a resident enterprise, and investments made by non-resident subsidiaries or associates in a resident direct investor.

FDIs can be in the form of equity capital, reinvestment of earnings, and borrowings.

"The FDI net inflows rose for the third consecutive month on the back of investors' improving sentiment due in part to easing of containment measures, and some signs of gradual improvements in economic activity based on high-frequency indicators," the BSP said in an accompanying statement.

"The growth in FDI net inflows in July 2020 was mainly on account of net investments in debt instruments," the BSP added, with a 60.1% growth to $643 million from $402 million last year.

Net investments in debt instruments consist mainly of intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines.

Equity capital placements for July came mostly from Japan, China, and the United States and were channeled largely into construction, real estate, wholesale and retail trade, and manufacturing.

The same data from the BSP showed year-to-date FDI at $3.795 billion, lower than the $4.259 billion recorded in the comparable period in 2019. —Jon Viktor Cabuenas/KG, GMA News