Foreign investments soar in July as lockdown rules eased – BSP

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(FILE PHOTO)

Metro Manila (CNN Philippines, October 12) — Foreign investments posted a steady climb to $797 million in July to log the biggest haul so far this year, the Bangko Sentral ng Pilipinas said.

Foreign direct investments or FDIs surged by 35.2 percent from the $590 million net inflow in July 2019 to sustain a three-month ascent.

Still, the $3.8-billion FDI tally for the past seven months settled nearly 11 percent lower compared to $4.3 billion for the same period a year ago, pulled down by dwindling debt placements.

Debt placements jumped by 60.1 percent to $643 million for July alone, nearly triple the June inflow. This mostly represents intercompany borrowings, where foreign investors infuse more funds in their local subsidiaries.

"The FDI net inflows rose for the third consecutive month on the back of investors’ improving sentiment due in part to easing of containment measures, and some signs of gradual improvements in economic activity based on high-frequency indicators," the BSP said Monday.

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The entry of foreign investments fuel local business expansions, which also translates into more job opportunities for Filipinos.

All other investment vehicles saw declines during the month. Equity infusions slid by a fifth to net $81 million, largely due to lower gross inflows that dropped by half to just $89 million.

Capital came from Japan, China, and the United States, which mostly went into construction, real estate, wholesale and retail trade, and manufacturing, the BSP said.

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Reinvested earnings also slid by 16.1 percent to settle at $73 million, against last year's $87 million.

The COVID-19 crisis led to a deceleration in global economic activity, with the travel and tourism sector hit the hardest. Most of the world is currently in recession, with millions of people laid off or saw lower incomes. In turn, these crimped consumer spending and demand for goods.

The central bank expects FDIs to ease this year as investors hold on to cash during the pandemic, with the country seen attracting just $4.1 billion compared to $7.6 billion infused by investors a year ago.