BSP: FDI inflows log fourth straight month growth in August, up 46.9%

Foreign direct investments (FDIs) posted four straight months of increase in net inflows in August as investors continued to bet on the country’s recovery from the COVID-19 pandemic, the Bangko Sentral ng Pilipinas said Wednesday.

Data released by the BSP show that FDIs yielded a net inflow of $637 million in August, up 46.9% from $434 million in the same period in 2019, marking the fourth consecutive month of year-on-year expansion.

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 increased for the fourth consecutive month, owing to investors’ renewed confidence as the National Government’s fiscal stimulus and BSP’s accommodative monetary policy stance to mitigate the impact of COVID-19 pandemic gained traction along with the easing of quarantine measures in the country,” the central bank said.

“The growth in FDI net inflows during the month was largely on account of the 72.2% growth in net investments in debt instruments, which amounted to $459 million from $267 million in the comparable month last year,” it said.

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

Meanwhile, net equity capital placements during the month originated mostly from Japan, the United States, and the British Virgin Islands.

These were invested mainly in manufacturing, real estate, financial and insurance, and professional, scientific, and technical industries.

On a cumulative basis, the FDI net inflows contracted by 5.6% to $4.4 billion in January to August as compared to the $4.7 billion net inflows in the same period last year.

“The four consecutive months of growth since May resulted in the considerable narrowing of the cumulative net FDI contraction of 27.9% in April 2020,” the BSP said.

“The lower cumulative net FDI contraction of 5.6% can be generally attributed to net inflows in equity capital investments (other than reinvested earnings) and debt instruments for the period May to August 2020,” it added.

The net equity capital placements during the first eight months of 2020 came mostly from Japan, the Netherlands, the United States, and Singapore.

Investments were channeled largely to manufacturing, real estate, financial and insurance, administrative and support service, and wholesale and retail trade industries. —LBG, GMA News