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FDI Post Net Inflows of US$430 Million in June 2019 & First Semester Level Reach US$3.6 Billion

09.10.2019

Foreign direct investments (FDI) posted net inflows of US$430 million in June 2019, albeit 48.5 percent lower than the US$836 million net inflows recorded in the same month last year. 1,2  Non-residents’ investments in debt instruments (or lending by foreign companies abroad to their local affiliates to fund existing operations and business expansion) registered lower net inflows of US$317 million from US$570 million. Likewise, non-resident’s net investments in equity capital decreased to US$25 million from US$184 million.  Equity capital placements during the period came mostly from Singapore, the United States, Japan, the Netherlands and China.  These investments were channeled mainly to 1) real estate, 2) manufacturing, 3) financial and insurance, 4) electricity, gas, steam and air conditioning supply and 5) transportation and storage industries.  Reinvestment of earnings expanded by 8.3 percent to US$89 million from US$82 million in the same month last year.

For the first six months of 2019, FDI recorded net inflows of US$3.6 billion, 38.8 percent lower than the US$5.8 billion net inflows recorded in the first semester of last year.   This resulted as net equity capital investments declined to US$361 million (from US$1.6 billion) as placements dipped by 50.8 percent to US$860 million (from US$1.7 billion) and withdrawals increased by 206.6 percent to US$499 million (from US$163 million).  Equity capital placements during the period were sourced largely from Japan, the United States, Singapore, China and South Korea.  The industries that benefited from said capital infusions were 1) financial and insurance 2) real estate, 3) manufacturing, 4) transportation and storage, 5) administrative and support service. In addition, lower net investments in debt instruments were recorded at US$2.7 billion (from US$3.8 billion).  Meanwhile, reinvestment of earnings increased by 12.1 percent to US$507 million from US$453 million in the first semester of 2018.

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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 from 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 from 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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