By Beatrice M.听Laforga, Reporter听
Foreign direct investments (FDI) rebounded in June on base effects and听an听improving economic landscape, according to听the听latest central bank data.听
FDI net inflows surged by 60.4% to $833 million from听a听year听earlier, based on preliminary data from the听Bangko听Sentral听ng听Pilipinas听(BSP).听The net inflows听nearly doubled from $433 million听a month earlier.听
This pushed first-half FDI net inflows higher by 40.7% year on year to $4.298 billion.听
鈥淐oncerns over the spread of听a听more transmissible Delta variant may have prompted investors to remain on the sidelines,鈥 the central bank听said in a statement on Friday.听
FDIs spiked听from a low base in the first half of 2020, when lockdowns听across听the country were more stringent, spooking听investors,听said听Cid听Terosa, a senior economist at the听University of Asia and the Pacific.听
鈥淭he economic revival in many developed countries and the intense effort to vaccinate more Filipinos must have buoyed investor sentiment about the Philippines,鈥澨齢e said in an e-mailed response to questions.听
Nonresidents鈥 net investment in debt instruments, consisting mainly of inter-company borrowings between foreign direct investors and their听units听in the country,听grew by 152% to $630 million in June.听
Meanwhile, nonresidents鈥 net investments in equity capital went down by听48.4% to $93听million in June, as听a听38.2% drop in equity capital听placements听to $119 million offset听a more than double听jump in equity capital听withdrawals听worth $26 million.听
Majority of equity capital placements came from Singapore, Japan and the United States, and were channeled into manufacturing; financial and insurance; and听the听electricity, gas, steam and air-conditioning sectors.听
Reinvestment of earnings also grew by 23.4% to $110 million in June.听
In the six months to June, foreign net investments in debt instruments grew by 86.5% to $2.805 billion.听
Net investments in equity capital fell by 48.4% to $971 million,听with equity capital placements dropping by 10.4% to $1.14 billion and equity capital withdrawals听falling by听18.3% to $165 million.听
Reinvestment of earnings, on the other hand,听rose听by 7.7% year on year to $522 million in听the first half.听
The BSP听expects听FDI net inflows听to听hit $7.5 billion by year-end.听
Foreign investors听would probably听remain cautious due to renewed lockdowns听as the pandemic drags on, Mr.听Terosa听said.听
More targeted lockdowns could ease the negative effect听on investor sentiment, he added,听apart from听credit rating听companies not听drastically changing听their outlook for the Philippines.听
The enactment of听a measure that lowered the corporate income tax and reformed the country’s fiscal incentive system,听coupled with low interest rates听and a听pickup in global demand听had听also helped buoy foreign investments,听said听Michael L.听Ricafort,听chief economist at听Rizal Commercial Banking Corp. (RCBC).听
“Relatively lower cost of inputs for investments as a result of softer demand conditions due to the COVID-19 pandemic may have also made FDIs cheaper from the point of view of global companies that constantly invest around the world,鈥 he said.听
