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FDI net inflows slide in September

Net inflows of foreign direct investments shrank in September, after four straight months of double-digit annual growth. — PHILIPPINE STAR/MICHAEL VARCAS

FOREIGN DIRECT investments (FDI) to the Philippines slumped in September after four straight months of year-on-year growth, as uncertainty over the coronavirus disease pandemic weighed on investor sentiment.

Bangko Sentral ng Pilipinas (BSP) data showed net inflows of FDI stood at $523 million in September, dropping by 12.3% from $596 million in the same month in 2019. This was also 17% lower than the $637 million in FDI net inflows logged in August.

“The two-week Modified Enhanced Community Quarantine (MECQ) in Metro Manila and surrounding areas in the first half of August may have dampened investor sentiment on prospects of the economy’s re-opening,” the central bank said in a statement on Thursday.

To recall, Metro Manila and nearby provinces were once again placed under a MECQ to curb a sharp rise in COVID-19 infections.

FDI net inflows in the nine months to September was down 8.6% to $4.832 billion from $5.289 billion in the same period of 2019.

“The decline in FDI inflows reflected the worldwide cautious investment climate, following the continued effects of the prolonged COVID-19 health crisis on the global economic outlook,” the BSP said.

The central bank expects FDI inflows to reach $5.6 billion this year.

Under normal circumstances, the so-called “ber” months are “quite productive” periods for the economy, said John Paolo R. Rivera, an economist at the Asian Institute of Management.

“The decline in September reveals how slowly (but surely) the economy is moving again relative to other economies that are showing more stable and tangible recovery even in the short to medium run, thereby attracting more FDIs,” Mr. Rivera said in a Viber message.

In September, only equity other than reinvestment of earnings grew among FDI components, up  2.5% to $99 million from $96 million a year ago. Placements slipped 8.6% to $114 million and withdrawals plummeted 46.5% to $15 million.

The BSP said a big chunk of the placements came from Japan, the Netherlands, the US, and Singapore and were funneled into industries such as manufacturing, real estate, and financial and insurance businesses.

Meanwhile, reinvestment of earnings saw the largest drop as it slid 19.7% year on year to $62 million in September.

Net investments in debt instruments declined 14.3% to $362 million, while inflows that went into equity and investment fund shares also slipped 7.3% to $161 million.  Luz Wendy T. Noble

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