Foreign players stayed away from the Philippines as their long-term investments in the first five months of the year fell by an annualized rate of 37.1 percent, according to the latest data released by the Bangko Sentral ng Pilipinas (BSP).

The BSP reported on Tuesday that net foreign direct investment (FDI) inflows into the Philippines declined to $3.1 billion, from last year’s $5 billion due largely to the drop in net equity capital placements.

Figures from the BSP indicated that net equity capital investments fell to $787 million, from $1.5 billion recorded in the first five months of 2018. Withdrawals rose to $451 million in 2019 from last year’s $139 million.

BSP data also showed that net investments in debt instruments during the period contracted by 26 percent to $2.4 billion, from $3.2 billion in 2018.

FDI is the type of investment that is often more coveted, as it stays longer in the economy and creates job opportunities for locals. Such investments are also usually an indicator of long-term sentiment of the global community for the Philippines’s economic dynamics, as FDI are not easily pulled out of the market, unlike their shorter-term counterpart, the foreign portfolio investments.

In the first five months of 2019, equity capital placements originated from Japan, the United States, China, Singapore and South Korea.

These were channeled largely to financial and insurance, real estate, manufacturing, transportation and storage, and administrative and support service industries.

Reinvestment of earnings expanded by 12.9 percent to $418 million, from $371 million in the same period last year.

For the month of May alone, FDI declined by 85.1 percent to $242 million, from last year’s $1.6 billion net inflows.

Some economists, however, expressed optimism that the country’s FDI numbers will recover toward the end of the year.

“S&P upgraded the Philippine credit ratings by one notch to BBB+, two notches above the minimum investment grade.

This reflects improved international investor sentiment/confidence on the Philippines, and may increase FDI inflows into the country,” the RCBC economic team said.

Image Credits: Bernard Testa