Long-term foreign investor commitments in the Philippines fell by about a third in the January-to-July period, goaded for the most part by the eventuality that interest rates in the US, still one of the country’s largest trade partners, should soon adjust higher.
The Bangko Sentral ng Pilipinas (BSP) on Monday reported that foreign direct investments (FDI) flowed inward over the nine-month period to $2.5 billion.
This was 35.2 percent lower than net inflows totaling $3.8 billion in the same period last year.
This developed no matter the rise in the volume of investments in July alone to $458 million. The same was 1.6 percent higher than FDI of $458 million registered in July last year.
Governments around the world welcome the participation of FDI, as these are invested with an eye for the long haul in so-called brick- and-mortar enterprises. Portfolio investments, also known as “hot” or speculative money, are volatile by nature and tend to exit at the merest hint of trouble or promise of greater rewards elsewhere.
While the BSP did not cite particular reasons as to why foreign investors shied away from investing in the Philippines, several economists reported of lower investment spending across emerging markets, partly as a result of the unsteady growth prospect of economies such as China, among others.
In terms of FDI component, net equity capital placements increased marginally by 1 percent to $805 million, from $797 million. This was not enough, however, to offset the “large” declines in investments in debt instruments at 51.6 percent and reinvestment of earnings at 12.7 percent. Equity capital placements amounting to $1 billion came mostly from the United States, Singapore, Hong Kong, Japan and Germany.
These investments were channeled mainly to manufacturing, financial and insurance, real estate, electricity, gas, steam and air-conditioning supply and mining and quarrying activities.