Foreign direct investments (FDIs) on long-term capital placements by foreign investors shot up to $1.3 billion in July, an increase of 52 percent over the same period last year of $831 million. This is attributed to investor confidence brought about by increased vaccinations and the reopening of many of the world’s economies.
FOREIGN direct investments reached a net inflow of $1.3 billion in July, up by 52 percent over the same period last month at $831 million.
This indicates that investor confidence is returning as the country moves towards population protection and eventually towards herd immunity thereby improving economic recovery prospects.
More FDIs coming
“More FDI would also be encouraged to locate as the country in the coming months,” projected Michael Ricafort, economist of Rizal Commercial Banking Corp.
FDIs are long term investments made by foreign investors in the country.
Since these investments are in the country for the longer term compared to short-term investments (or foreign portfolio investments), FDIs usually create jobs for Filipinos and have multiplier effects on the economy, the Bangko Sentral explained.
61.1 % growth rate
The BSP attributed the increase in FDI net inflows in July this year mainly to the 61.1-percent growth year-on-year in investments in debt instruments to $1.1 billion from $667 million.
Similarly, reinvestment of earnings rose by 87.1 percent to $155 million from $83 million.
July’s FDI growth brought the cumulative FDI net inflows to $5.6 billion, 43.1 percent higher than the $3.9-billion net inflows in the first seven months of 2020.
This was mainly on account of the 78.7-percent expansion in non-residents’ net investments in debt instruments to $3.9 billion, from $2.2 billion.
Likewise, reinvestment of earnings reached $677 million, 19.3 percent higher than the $567 million.
Capital placements
Net investments in equity capital decreased by 12.4 percent due to the downturn in placements by 9.5 percent to $1.2 billion from $1.4 billion, and the increase in withdrawals by 6 percent to $223 million from $210 million.
Equity capital placements emanated largely from Singapore, Japan, and the United States.
These were infused mostly in the manufacturing; financial and insurance; and electricity, gas, steam, and air-conditioning industries.
Ricafort also traced investor optimism on the increased vaccination and the normalization of economies that helped push up the FDI numbers, BusinessMirror explained.
“Economies locally and in many countries around the world have further picked up and reopened from the hard lockdowns, especially from the worst levels in March-April 2020, thereby allowing more inflows of FDI into the Philippines, as facilitated by improvements in the global supply chains and logistics,” Ricafort said.
Continued growth
Going forward, the economist forecast continued growth in FDI for the Philippines.
“For the coming months, FDI could still continue to go up amid better global economic prospects as some developed countries that are the major sources of FDI move towards herd immunity,” Ricafort said.
Tags: #FDIs, #investorconfidence, #increasedvaccinations, #reopeningofeconomies, #economy