LONG-TERM investments made by foreign investors to the Philippines sustained their growth in August this year, marking the third consecutive month of higher investments from its 2020 level.
The Bangko Sentral ng Pilipinas (BSP) reported on Wednesday that foreign direct investments (FDI) hit a net inflow of $812 million in August—up 19.8 percent from the $677 million seen in the same month last year.
This development brought the FDI net inflows for the first eight months of the year to $6.4 billion, higher by 39.7 percent than the $4.6-billion net inflows in the comparable period in 2020.
FDI are investments made by foreign players to the Philippines in the hopes of long-term return. Since these are in the country for a longer-term compared to their short-term counterpart—the foreign portfolio investments (FPI)—FDI usually create jobs for Filipinos and have a multiplier effect on the economy.
The BSP attributed the increase in FDI net inflows in July this year mainly to the 71.6-percent growth year-on-year in investments in debt instruments, to $4.5 billion from $2.6 million, in the January-to-August period during the year.
Likewise, reinvestment of earnings rose by 11 percent to $776 million from $699 million in 2020.
Non-residents’ net investments in equity capital, however, declined by 12.2 percent to $1.1 billion, from $1.2 billion a year ago.This, as placements dropped by 8.2 percent to $1.4 billion from $1.5 billion while withdrawals increased by 12.1 percent to $272 million from $243 million.
Equity capital placements were sourced primarily from Singapore, Japan, and the United States. These were channeled mainly in the manufacturing; financial and insurance; electricity, gas, steam, and air-conditioning; and real-estate industries.
Just last month, a BSP paper on FDI developments in the Asean-5 showed that out of the 13 variables identified by the study as determinants to FDI attractiveness, the Philippines was the poorest in 7 indicators among the Asean-5 nations.
The Asean-5 in the study comprised Thailand, Malaysia, the Philippines, Indonesia and Vietnam.