Foreign direct investments in August were something that the country can hopefully build up on after they rose by $135 million over that of the same period last year. Actual FDIs improved from $667 million in August 2020 to $812 million in August 2021, driven mainly by long-term infusions of head offices abroad to their local companies.
FOREIGN investments in the country—mainly infusions of head offices from abroad in the Philippines—rose by $135 million in August 2021 or from $677 million during the same month last year to $812 million.
39.7 percent higher
The Bangko Sentral ng Pilipinas reported yesterday that foreign direct investments (FDIs) brought net inflows for the eight months this year to $6.4 billion, higher by 39.7 percent than the $4.6 billion during the comparable period in 2020.
FDIs are investments made by foreign players to the Philippines in the hopes of long-term return.
Since these are in the country for a longer-term compared to their short-term counterpart—the foreign portfolio investments (FPI)—FDI usually create jobs for Filipinos and have a multiplier effect on the economy.
The cumulative FDIs net inflows rose on the back of the 71.6 percent growth in non-residents’ net investments in debt instruments to $4.5 billion from $2.6 billion.
Reinvestment earnings
Likewise, reinvestment of earnings rose by 11.0 percent to $776 million from the $699 million registered last year.
The BSP attributed the increase in FDI net inflows in July this year mainly to the 71.6-percent growth year-on-year in investments in debt instruments, to $4.5 billion from $2.6 million, in the January-to-August period during the year.
Likewise, reinvestment of earnings rose by 11 percent to $776 million from $699 million in 2020.
Withdrawals
However, non-residents’ net investments in equity capital, other than reinvestment of earnings, declined by 12.2 percent to $1.1 billion, from $1.2 billion in 2020.
This, as placements dropped by 8.2 percent to $1.4 billion from $1.5 billion while withdrawals increased by 12.1 percent to $272 million from $243 million.
Placements’ sources
Equity capital placements were sourced primarily from Singapore, Japan, and the United States. These were channeled mainly in the manufacturing; financial and insurance; electricity, gas, steam, and air-conditioning; and real-estate industries.
Just last month, a BSP paper on FDI developments in the Asean-5 showed that out of the 13 variables identified by the study as determinants to FDI attractiveness, the Philippines was the poorest in 7 indicators among the Asean-5 nations.
The Asean-5 in the study comprised Thailand, Malaysia, the Philippines, Indonesia and Vietnam.
Net investments in equity capital fell as placements dropped by 8.2 percent to $1.4 billion from $1.5 billion and withdrawals increased by 12.1 percent to $272 million from $243 million.
Equity capital placements
Equity capital placements came primarily from Singapore, Japan and the United States. These were channeled mainly to the manufacturing; financial and insurance; electricity, gas, steam, and air-conditioning; and real estate industries.
For August 2021, the expansion in FDI net inflows was driven by non-residents’ net investments in debt instruments, which grew by 38 percent year-on-year to $636 million from $461 million in August 2020.
Reinvestment of earnings contracted by 24.7 percent to $99 million from $132 million.
Likewise, non-residents’ net investments in equity capital declined by 9.7 percent to $77 million from $85 million in August 2020.
This was due to the rise in equity capital withdrawals (by 51.2 percent to $50 million from $33 million, which more than offset the increase in equity capital placements by 7.3 percent to $126 million from $118 million.
Equity capital placements originated mostly from Japan, the Netherlands, and the United States. These were directed largely to the manufacturing; information and communication; and real estate industries.
Tags: #FDIs, #investments, #economy