Foreign direct investments (FDI) recorded net inflows of US$961 million in April 2019 as all FDI components registered positive balances during the month. This level, however, was 11.8 percent lower than the US$1.1 billion net inflows posted in the same period last year.1,2
During the month, net inflows of net equity capital declined by 85.5 percent to US$39 million from US$272 million in April 2018. Equity capital placements emanated largely from Thailand, the United States, Singapore, Hong Kong, and Japan. These were channeled mainly to the 1) financial and insurance, 2) real estate, 3) manufacturing, 4) electricity, gas, steam and air-conditioning supply and 5) construction industries. Meanwhile, non-residents’ investments in debt instruments (consisting mainly of loans extended by parent companies abroad to their local affiliates) increased by 12.6 percent to US$830 million from US$737 million posted last year. Likewise, reinvestment of earnings reached US$92 million, higher by 14 percent than the US$80 million recorded in April 2018.
On a year-to-date basis, FDI yielded US$2.9 billion net inflows in January-April 2019, a 14 percent decrease from the US$3.4 billion net inflows recorded a year ago. This developed on account of the decline in net equity capital investments as placements dropped by 44.5 percent to US$712 million from US$1.3 billion, coupled with a 204.9 percent increase in withdrawals to US$377 million from US$124 million during the period.
Equity capital placements during the first four months of the year were sourced mostly from Japan, the United States, China, Singapore, and South Korea. These were invested mainly in the 1) financial and insurance, 2) real estate, 3) manufacturing, 4) transportation and storage, and 5) administrative and support service industries. Meanwhile, net investments in debt instruments rose by 16.3 percent to reach US$2.2 billion from US$1.9 billion posted a year ago. Reinvestment of earnings amounted to US$326 million, higher by 12.1 percent than the US$291 million recorded in the same period last year.
1 Based on the Balance of Payments and International Investment Position Manual, 6th edition (BPM6) which uses the asset and liability principle in the compilation of FDI statistics. Under the asset and liability principle, claims of non-resident direct investment enterprises on resident direct investors are presented as reverse investment under net incurrence of liabilities/non-residents’ investments in the Philippines (previously presented in the Balance of Payments Manual, 5th edition (BPM5) as negative entry under assets/residents’ investments abroad). Conversely, claims of resident direct investment enterprises on foreign direct investors are presented as reverse investment under net acquisition of financial assets/residents’ investments abroad (previously presented as negative entry under liabilities/non-residents’ investments in the Philippines).
2 BSP statistics on FDI covers actual investment inflows, which could be in the form of equity capital, reinvestment of earnings, and borrowings between affiliates. In contrast to investment data from other government sources, the BSP’s FDI data include investments where ownership by the foreign enterprise is at least 10 percent. Meanwhile, FDI data of Investment Promotion Agencies (IPAs) do not make use of the 10 percent threshold and include borrowings from foreign sources that are non-affiliates of the domestic company. Furthermore, the BSP’s FDI data are presented in net terms (i.e., equity capital placements less withdrawals), while the IPAs’ FDI do not account for equity withdrawals.
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