Net FDI down 43.6% in Nov

FOREIGN direct investments (FDI) slumped in November last year, the Bangko Sentral ng Pilipinas (BSP) reported on Friday, with net inflows contracting by 43.6 percent to $793 million from $1.4 billion a year earlier.

Year-to-date net FDI subsequently came in at $8.4 billion, down 13.4 percent compared to the $9.7 billion seen in January-November 2021.

The declines in both the November and 11-month tallies were attributed to lower net investments in debt and earnings reinvestments, which overcame a rise in net equity capital placements.

In November alone, net investments in debt instruments plummeted by 55.2 percent to $540 million from $1.2 billion a year earlier. The year-to-date fall was 17.7 percent to $5.9 billion from $7.17 billion.

Reinvestments of earnings, meanwhile, fell by 12.6 percent on a monthly basis and 8.0 percent year to date to $73 million from $84 million and $1.08 billion from $1.18 billion, respectively.

On the other hand, net equity other than reinvestments surged by 51.8 percent to $180 million from $118 million in November, a result the BSP said marked the third month in a row of year-on-year gains.

For the 11-month period, the net result was 4.2 percent higher at $1.44 billion from $1.38 billion.

By country source, equity capital placements in November came mostly from Japan, Singapore and the United States, the central bank said.

These were invested largely in manufacturing, information and communication, and real estate industries.

Broken down, 53 percent of November’s gross placements went to manufacturing, 23 percent to information and communication, 12 percent to real estate, and the remainder to other industries.

Year to date, manufacturing cornered 33 percent of gross placements. It was followed by real estate (18 percent), finance and insurance (15 percent), information and communication (10 percent), construction (10 percent), and others (15 percent).

Asked to comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the slowdown in net FDI could be due to higher short-term interest rates and a peak in long-term interest rates around October-November, among others.

Still, he said that net FDI was still the highest since the Covid-19 pandemic as the economy had reopened and moved toward greater normalcy.

The Philippines, he added, “is still expected to have one of the fastest growth rates in the region.”