Philippine economy

FDI up for 3rd straight month as Philippine economy opens up

Ralf Rivas
Long-term investments grow by 35.2% in July 2020, as the government eases coronavirus restrictions despite surging cases

Foreign direct investments (FDI) registered net inflows for the 3rd straight month, as coronavirus containment measures loosened up despite rising cases.

Long-term investments in July posted a 35.2% growth to $797 million from the $590 million in the same period last year, latest figures from the Bangko Sentral ng Pilipinas (BSP) showed.

“FDI net inflows rose for the 3rd consecutive month on the back of investors’ improving sentiment due in part to easing of containment measures, and some signs of gradual improvements in economic activity based on high-frequency indicators,” the BSP said.

The improvement in July narrowed the year-to-date decline to 10.9% for the first 7 months of 2020 from the 18.3% cumulative contraction in January to June, or to $3.8 billion from $4.3 billion.

The central bank said FDI growth in July 2020 was mainly due to net investments in debt instruments, which rose by 60.1% to $643 million from $402 million in July 2019.

The BSP further explained that investments in debt instruments during the period consisted mainly of intercompany borrowing between foreign investors and their affiliates in the Philippines. 

However, net equity capital investments plunged 19.6% to $81 million in July from $101 million during the same period a year ago.

Bulk of equity capital placements came mostly from Japan, China, and the United States. These were channeled largely to construction, real estate, wholesale and retail trade, and manufacturing.

Reinvestment of earnings also decreased by 16.1% to $73 million in July from $87 million last year.

The United Nations Conference on Trade and Development earlier warned that the rapid spread of the coronavirus would cause a “dramatic drop” in global FDI, which is a measure of cross-border private sector investment.

The Philippines now ranks 18th worldwide in terms of number of coronavirus cases at 339,341, overtaking Saudi Arabia as of Sunday, October 11. – Rappler.com

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Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.