FOREIGN direct investments (FDI) dropped by 15.1% in the four months to April due to slower-than-expected global economic recovery and bleak investor sentiment, the Bangko Sentral ng Pilipinas (BSP) said yesterday.
Data from the central bank showed that foreign direct investments — foreign money brought into a country for the long term to build factories or employ people — dipped to $552 million in the first four months of the year from the $650 million posted in the same period in 2010.
The BSP, in a statement, said the decline was due to “generally sluggish growth in advanced economies, particularly Japan and the United States, and the prevailing cautious investor sentiment amid heightened uncertainties” due to the euro zone debt crisis and geopolitical unrest in the Middle East and North Africa region.
The country continued to be a recipient of foreign funds on account of its strong macroeconomic fundamentals and favorable growth prospects.
The bulk of FDI inflows for the first quarter was recorded in the other capital account, which consists mainly of intercompany borrowings between foreign direct investors and their subsidiaries or affiliates in the Philippines.
Capital accounts registered a net inflow of $283 million in the first four months of 2011, down by 20.7% from the $357 million recorded during the same period in 2010, BSP data showed.
“This was due mainly to lower net loan availments by local subsidiaries from their foreign/parent companies,” the BSP explained.
Reinvested earnings followed the same trend, dipping by 12% to $168 million from $191 million reported a year ago.
Net inflows in equity capital also declined to $101 million from $102 million previously.
Placements in equity capital, the central bank said, were mainly channeled to the real estate, manufacturing, wholesale and retail trade, utilities and construction sectors.
For the month of March, net FDI decreased chiefly due to lower equity capital placements, the central bank also said.
The month’s net FDI inflow dropped by 4.7% to $81 million from $85 million in April of last year.
Equity capital net inflows plunged by 64.9% to $20 million from $57 million posted a year earlier.
Net inflows of reinvested earnings, on the other hand, increased almost seven times to $55 million from $8 million previously, while net inflow of other capital decreased 70% to $6 million from $20 million.
The US, Singapore, Hong Kong, Japan and the Netherlands were the top investors for the period.
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