Foreign direct investments soar in July 2018 despite economic tensions

Ralf Rivas
The central bank says the higher foreign direct investment inflows in July reflect the 'continued positive investor sentiment on the Philippine economy'

INVESTORS' APPETITE. The country's foreign direct investments soar despite economic woes. File photo

MANILA, Philippines – Foreign direct investments (FDI) increased in July despite high inflation, a slowdown of economic growth, and short term capital flight.

The Bangko Sentral ng Pilipinas reported on Wednesday, October 10, that FDI inflows in July reached $914 million, 62.36% higher than the $344 million in the same month last year, and higher than the $831 million recorded in June.

“This reflected the continued positive investor sentiment on the Philippine economy on the back of strong macroeconomic fundamentals and growth prospects,” the BSP said.

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The government aims for high FDIs as they infuse the economy with additional capital and create more job opportunities. Unlike portfolio investments which can be easily pulled out by foreign investors, FDIs stick around longer as companies set up shop in the country.

FDI net inflows from January to July stood at $6.669 billion, 52.1% higher than the $4.385 billion in the same period last year.

The central bank projected FDIs to hit over $9 billion in 2018.

The BSP said that the surge was due to account expansions in net capital investments, which hit $1.8 billion from $338 million in 2017.

Funds so far were channeled mostly to manufacturing, financials and insurance, real estate, arts, entertainment and recreation, and electricity, gas, steam and air-conditioning supply activities.

Equity capital placements were mainly from Singapore, Hong Kong, Japan, the United States, and China.

Various business groups have repeatedly said that the Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho) bill will significantly dent FDIs. (WATCH: Rappler Talk: Dissecting the Trabaho bill)

Amid such concerns, the Department of Finance remained confident that rationalizing fiscal incentives by giving them only to “deserving” industries will attract more investors. – Rappler.com