Foreign direct investments slow to $364 million in May 2016

SLOWDOWN. May's investments fail to reach the previous month's highs. File photo from AFP

SLOWDOWN. May's investments fail to reach the previous month's highs.

File photo from AFP

MANILA, Philippines – Foreign direct investments (FDIs) slowed in May 2016 after hitting a record high in April.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday, August 10, showed that FDIs hit net inflows of $364 million for May. The figure is 9.4% lower than the $403 million recorded in the same month last year and down significantly from the $2.2 billion recorded in April 2016.

May's FDI inflow means that the country has recorded net inflows for every month so far this year for a total of $3.9 billion, which the BSP noted was more than double the $1.6 billion seen in the same 5-month period last year.

The surge in investments this year is largely due to the debt instrument component, which consists mainly of inter-company lending and borrowing between foreign investors and their subsidiaries in the Philippines.

Debt instruments grew by 143.7%  to hit $2.1 billion so far this year from $878 million in 2015.

Net inflows of equity capital also more than tripled to $1.4 billion from $440 million last year, which the BSP said was the result of positive investor sentiment given the country's high growth coupled with low inflation.

From January to May, new equity capital infusions amounted to $1.5 billion compared to withdrawals of $125 million. Investments came mainly from Japan, Hong Kong, Singapore, the United States, and Taiwan. 

Reinvestment of earnings, meanwhile, have so far hit $321 million.

May investments

All FDI components hit positives in May led by debt instruments which accounted for $220 million, up 15.4% from $191 million in the same month last year.

Net equity capital recorded net inflows of $79 million as equity capital placements of $86 million offset withdrawals of $8 million. 

The bulk of equity capital placements for May, the BSP said, came from Thailand, the United States, Hong Kong, Germany, and Singapore. They were channeled mainly to real estate; manufacturing; wholesale and retail trade; and electricity, gas, steam, and airconditioning activities. 

Reinvestment of earnings, meanwhile, amounted to $65 million during the month. –