Foreign direct investment (FDI) net inflows in May 2021 was at US$429 million, a decline of 25.4 percent from US$575 million net inflows in May 2020 (Table 1).1,2 Despite this, the cumulative FDI level remained higher by 37.8 percent at US$3.5 billion net inflows in January–May 2021 from US$2.5 billion net inflows in the same period last year. In particular, non-residents’ net investments in debt instruments rose by 76.2 percent to US$2.2 billion from US$1.2 billion. Further, reinvestment of earnings grew by 3.0 percent to reach US$407 million from US$395 million in the same period last year. Meanwhile, net investments in equity capital remained broadly stable at US$1.3 billion.
The FDI decline in May 2021 reflected renewed investor concerns on the rising cases of the new variants of COVID-19 globally. By component of FDI, non-residents’ net investments in debt instruments during the month contracted by 23.4 percent to US$269 million from US$351 million in May 2020.3
Likewise, non-residents’ net investments in equity capital declined by 53.4 percent to US$60 million in May 2021 from US$130 million in the comparable month last year. This was on account of the increase in equity capital withdrawals (by 70.2 percent to US$21 million from US$13 million) coupled with the decrease in equity capital placements (by 42.6 percent to US$82 million from US$142 million). Bulk of the equity capital placements during the month came from Japan, the United States, and Malaysia. These were channeled mostly to the 1) manufacturing; 2) real estate; and 3) financial and insurance industries. Meanwhile, reinvestment of earnings rose by 6.0 percent to US$99 million from US$94 million in May 2020.
On a year-to-date basis, equity capital placements declined by 5.4 percent to US$1.0 billion (from US$1.1 billion). Equity capital placements were sourced mainly from Singapore, Japan, and the United States. These were infused largely to the 1) financial and insurance; 2) electricity, gas, steam, and air-conditioning; 3) manufacturing; and 4) real estate industries. Equity capital withdrawals also decreased by 26.7 percent to US$139 million (from US$190 million).
Source: Bangko Sentral ng Pilipinas (BSP)