MANILA, Philippines — The inflow of foreign direct investments (FDI) fell by 14.5 percent to $813 million in August from $951 million in the same month last year, data from the Bangko Sentral ng Pilipinas (BSP) showed.
This is the lowest inflow in two months or since the $394 million in June. It was also 0.9 percent lower than the five-month high of $820 million in July.
“The decline in FDI net inflows during the month was due mainly to the contraction in nonresidents’ net investments in debt instruments,” the BSP said in a statement.
“Nonresidents’ reinvestment of earnings also declined,” it said.
Investments in debt instruments fell by 21.6 percent to $529 million in August from $675 million a year ago, while reinvestments of earnings declined by 9.4 percent to $217 million from $240 million.
Equity infusions plunged by 52.5 percent to $103 million from $217 million. However, withdrawals dropped by 79.8 percent to $36 million from $181 million. This brought equity other than reinvestment of earnings to $66 million, 83.6 percent higher than $36 million a year ago.
These equity capital placements came largely from Japan and the United States. These were mostly invested in the manufacturing, real estate as well as electricity, gas, steam and air-conditioning supply industries.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the lower FDI in August could be due to a wait-and-see stance by some foreign investors while waiting for a bill that will enhance the ease of doing business in the country to be passed into law.
The Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act was signed into law yesterday by President Marcos. This aims to make the country’s tax incentives regime more globally competitive and investment-friendly.
Still-elevated interest rates could have also partly weighed on FDI inflow, Ricafort said.
For the January to August period, net FDI inflow inched up by 3.9 percent to $6.1 billion from $5.8 billion in the same period last year.
Equity other than reinvestment of earnings surged by 59.4 percent to $1.34 billion from $840 million. Placements zoomed by 38.8 percent to $1.7 billion while withdrawals slipped by 6.6 percent to $356 million.
Equity infusions primarily came from the United Kingdom, Japan and the US during the eight-month period. These were channeled into manufacturing, real estate as well as wholesale and retail trade.
On the other hand, total reinvestment of earnings went down by 4.8 percent to $866 million in the January to August period from $910 million in the same period last year. Investments in debt instruments also decreased by 5.5 percent to $3.86 billion from $4.09 billion a year ago.
“For the coming months, the CREATE MORE Law would now make international investors more decisive to locate in the country with better incentives that could compete better with other ASEAN/Asian countries,” Ricafort said.