THE Bangko Sentral ng Pilipinas (BSP) reported on Tuesday that long-term investments made by foreign investors to the Philippines posted a double-digit decline in May this year.
Foreign direct investments (FDI) in May hit $429 million, declining by 25.4 percent from the $575 million in the same month last year.
Despite the decline in May, the cumulative FDI level remained higher by 37.8 percent at $3.5 billion net inflows in the first five months of the year from $2.5 billion net inflows in the same period last year.
The BSP said this is due largely to overall improvements across all the subsectors of FDI during the year.
FDI are investments that are 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 FDI decline in May 2021 reflected renewed investor concerns on the rising cases of the new variants of Covid-19 globally,” the BSP said in a statement.
By component of FDI, non-residents’ net investments in debt instruments during the month contracted by 23.4 percent to $269 million from $351 million in May 2020.
Foreign net investments in equity capital also declined by 53.4 percent to $60 million in May this year from $130 million in the comparable month last year. The BSP said this was on account of the increase in equity capital withdrawals by 70.2 percent to $21 million from $13 million in the same month last year.
This was coupled with the decrease in equity capital placements by 42.6 percent to $82 million from $142 million in May 2020.
Bulk of the equity capital placements during the month came from Japan, the United States, and Malaysia. These were channeled mostly to the manufacturing; real estate; and financial and insurance industries.
Meanwhile, reinvestment of earnings rose by 6 percent to $99 million from $94 million in May 2020.
Image courtesy of Nonoy Lacza