Net inflows of foreign direct investments dropped 25 percent in 2020 to $6.5 billion from $8.7 billion in 2019 amid the lingering impact of the COVID-19 pandemic, the Bangko Sentral ng Pilipinas said Wednesday.
“The disruptive impact of the pandemic on global supply chains and the weak business outlook adversely affected investor decisions in 2020,” the BSP said in a statement.
Data, however, showed the 2020 FDIs surpassed the target of $5.6 billion set by the government.
Non-residents’ net investments in debt instruments declined by 22 percent to $4.1 billion in 2020 from $5.2 billion in 2019 while net equity capital investments dropped 35.7 percent to $1.5 billion from $2.3 billion.
The bulk of the equity capital placements came from Japan, the Netherlands, the United States and Singapore. Capital infusions were directed mainly to manufacturing, real estate and financial and insurance industries, according to the BSP.
Reinvestment of earnings declined 13.6 percent last year to $978 million from $1.1 billion in 2019.
The BSP said FDI net inflows in December also fell 63 percent to $509 million from $1.4 billion a year ago.
“The year-on-year decline in FDI in December 2020 was due mainly to base effects given significantly large inflows from net investments in equity capital and debt instruments in December 2019,” the BSP said.
It said non-residents’ net equity capital investments went down by 89.8 percent to $78 million in December from $766 million in the same month in 2019.
This was led by the 87.8-percent contraction in equity capital placements to $97 million from $800 million, which was tempered partly by the 42.9-percent drop in equity capital withdrawals to $20 million from $34 million.
Equity capital placements in December were sourced mostly from Japan, the United States, the Netherlands and Singapore and were channeled to manufacturing, real estate and financial and insurance industries.
The BSP statistics on FDI include investment by a non-resident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent; and investment made by a non-resident subsidiary/associate in its resident direct investor. FDI can be in the form of equity capital, reinvestment of earnings and borrowings.
These are distinct from the investment data of other government sources. The FDI data of the BSP cover actual investment inflows while the approved foreign investment data published by the Philippine Statistics Authority are sourced from investment promotion agencies and represent investment commitments, which may not necessarily be realized fully in a given period.
The BSP expects FDIs to post a net inflow of $7 billion in 2021.