Category : Press Release
Date : December 10, 2020
Agency : Bangko Sentral ng Pilipinas
Title : FDI Posts US$523 Million Net Inflows in September 2020; First Three Quarters Level Reaches US$4.8 Billion
Article : he country’s net inflows in foreign direct investments (FDI) contracted to US$523 million in September 2020 after four consecutive months of double-digit year-on-year growths. FDI net inflows in September were lower by 12.3 percent than the US$596 million net inflows posted in the same month last year.1,2 The two-week Modified Enhanced Community Quarantine (MECQ) in Metro Manila and surrounding areas in the first half of August may have dampened investor sentiment on prospects of the economy’s re-opening. The decline in FDI net inflows during the month was largely due to the 14.3 percent drop in non-residents’ net investments in debt instruments, which amounted to US$362 million from US$423 million in September 2019.3 Reinvestment of earnings dipped by 19.7 percent to US$62 million from US$77 million in the same month in 2019.

The decline in FDI net inflows were mitigated partly by the 2.5 percent growth in non-residents’ net investments in equity capital, which reached US$99 million from US$96 million in September last year. The decrease in placements of equity capital by 8.6 percent (to US$114 million from US$125 million), was slower compared to the decline in withdrawals which contracted by 46.5 percent (to US$15 million from US$28 million). Equity capital infusions during the month emanated mainly from Japan, the United States, and Singapore. These placements were channeled largely to the 1) manufacturing, 2) real estate, and 3) financial and insurance industries.

For the first three quarters of 2020, FDI net inflows declined by 8.6 percent to US$4.8 billion from the US$5.3 billion in the comparable period of 2019. The decline in FDI inflows reflected the worldwide cautious investment climate, following the continued effects of the prolonged COVID-19 health crisis on the global economic outlook. By component, non-residents’ net investments in debt instruments fell by 22 percent to US$3 billion from US$3.8 billion. Likewise, reinvestment of earnings decreased by 20.5 percent to US$639 million (from US$804 million) during the period. Meanwhile, the expansion in non-residents’ net investments in equity capital by 85.2 percent to US$1.2 billion (from US$646 million) helped ease the decline in the cumulative FDI net inflows. Net investments in equity capital increased as placements rose by 6.4 percent to US$1.35 billion (from US$1.27 billion), while withdrawals dropped by 75.7 percent to US$151 million (from US$620 million). Bulk of the equity capital placements during the review period originated from Japan, the Netherlands, the United States, and Singapore. These were directed mostly to 1) manufacturing, 2) real estate, and 3) financial and insurance industries.

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1 The BSP statistics on FDI are compiled based on the Balance of Payments and International Investment Position Manual, 6th Edition (BPM6). FDI includes (a) investment by a non-resident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent, and (b) investment made by a non-resident subsidiary/associate in its resident direct investor. FDI can be in the form of equity capital, reinvestment of earnings, and borrowings.
2 The BSP FDI statistics are distinct from the investment data of other government sources. BSP FDI covers actual investment inflows. By contrast, the approved foreign investments data that are published by the Philippine Statistics Authority (PSA), which are sourced from Investment Promotion Agencies (IPAs), represent investment commitments, which may not necessarily be realized fully, in a given period. Further, the said PSA data are not based on the 10 percent ownership criterion under BPM6. Moreover, the BSP’s FDI data are presented in net terms (i.e., equity capital placements less withdrawals), while the PSA’s foreign investment data do not account for equity withdrawals.
3 Net investments in debt instruments consist mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines. The remaining small portion of net investments in debt instruments are investments made by non-resident subsidiaries/associates in their resident direct investors, i.e., reverse investment.

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??View Table 1 | https://www.bsp.gov.ph/Media_And_Research/Media%20Releases/2020_12/news-12102020a1.aspx

?View Table 2 | https://www.bsp.gov.ph/Media_And_Research/Media%20Releases/2020_12/news-12102020a3.aspx
Link : https://www.bsp.gov.ph/SitePages/MediaAndResearch/MediaDisp.aspx?ItemId=5628