Photo from Bangko Sentral ng Pilipinas

Foreign direct investment (FDI) net inflows in June 2021 rose by 60.4 percent year-on-year to reach US$833 million from US$519 million in the comparable period last year.

The Central Bank in a report said this development brought the FDI net inflows for the first semester of 2021 to US$4.3 billion, higher by 40.7 percent from the US$3.1 billion net inflows in January-June 2020.

The higher cumulative FDI net inflows were due mainly to the 86.5 percent growth in non-residents’ net investments in debt instruments to US$2.8 billion from US$1.5 billion.3 Likewise, reinvestment of earnings rose by 7.7 percent to US$522 million from US$484 million. However, net investments in equity capital declined by 8.9 percent to US$971 million from US$1.1 billion a year ago.

FDI net inflows in June 2021 increased mainly on account of infusion by foreign direct investors to their subsidiaries/affiliates in the Philippines in the form of net investments in debt instruments, which rose year on year by 151.8 percent to US$630 million. Likewise, reinvestment of earnings grew by 23.4 percent to US$110 million from US$89 million.

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Meanwhile, non-residents’ net investments in equity capital declined by 48.4 percent to US$93 million in June 2021 from US$180 million in the same month last year. This was due to the downturn in equity capital placements (by 38.2 percent to US$119 million from US$192 million) along with the increase in equity capital withdrawals (by 112 percent to US$26 million from US$12 million). 

Concerns over the spread of more transmissible Delta variant may have prompted investors to remain on the sidelines.  Equity capital placements during the month originated mostly from Japan, the United States, and Singapore. These were invested largely in the 1) manufacturing; 2) real estate; and 3) financial and insurance industries.

For the first semester of 2021, net investments in equity capital declined following the drop in placements by 10.4 percent to US$1.1 billion (from US$1.3 billion). These were mostly from Singapore, Japan, and the United States. Investments were channeled mainly to the 1) manufacturing; 2) financial and insurance; and 3) electricity, gas, steam, and air-conditioning industries. Equity capital withdrawals also declined by 18.3 percent to US$165 million (from US$202 million).

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