June 10, 2013

Foreign direct investments (FDIs) plunges in March

Foreign direct investments (FDIs) plunged to a net outflow of $78 M in March, putting a dent on the first quarter average. The net outflow, which indicates more investments left the country than entered, was the first since December 2011, BSP data showed.

It also reversed the $179-M net inflow a year ago. For the first three months, FDI remained on positive territory at a net inflow of $1.303 B, although this was 8.5% lower than a year ago level. The BSP expects FDI to reach $2.3 B this year.

Broken down, FDIs were mainly composed of reinvested earnings, which totaled $51 M in March, down 41.4% from last year’s $60  M. Meanwhile, equity investments — capital infusions of foreign companies to their offices here — posted a net outflow of $17 M in March due to combined effects of lower equity capital placements and higher withdrawals.

Foreign firms’ investments to debt instruments recorded the biggest drop, declining, to a net outflow of $112 M in March from $161 M net inflow last year. This is largely on account of remittance of profits by local branches of foreign banks to their head offices abroad. - WealthSec