FDI declined by 50% in Q1

June 11, 2015 at 17:23

The country’s foreign direct investments (FDI), listed as some of the worst performing around the world, fell by more than 50 percent in the first three months to only $851 million, the Bangko Sentral ng Pilipi-nas (BSP) said on Wednesday.

According to the BSP, FDI for the period, the kind encouraged by the government because they stay invested for the long haul and generate not just taxes for the national coffers but employment opportunities for many Filipinos, fell to only $851 million, from $1.715 billion reported a year earlier.

This developed even as exports in April dropped by 4.1 percent to $4.37 billion, due to the decline in outward shipments of eight major commodities, the Philippine Statistics Authority (PSA) said.

Electronic products, which remained as the country’s top export, recorded receipts of $2.21 billion, higher than the $1.88 billion recorded in April last year.  The commodity accounted for 50.6 percent of total exports revenue during the period.

Combined merchandise exports for the four-month period declined by 1.2 percent to $18.62 billion, from $18.84 billion recorded from January to April last year.

The PSA also released the results of its monthly survey of select industries. April data showed that factory output in terms of volume grew by 1.4 percent.

The PSA added that the growth was mainly due to the output of 13 major sectors, with significant increases in chemical products, tobacco products, furniture and fixtures, basic metals, textiles, printing and paper products, and beverages.

In terms of value, factory output dropped by 4.2 percent in April, compared with the two-digit growth of 10.9 percent during the same month last year.

Data show FDI weakening sharply to only $229 million in March alone from $359 million in February and $263 million in January.

These developments corresponded with a very volatile period in the global economy when the prospect of a so-called normalization in US interest rates loomed large over emerging markets like the Philippines where the period of domestic low interests have allowed the $272-billion economy to carve respectable growth averaging 5.2 percent during the quarter.

That same economic expansion measured as the gross domestic product (GDP) has proven lower than most analyst and economist expectation.

During the quarter, so-called equity and investment fund shares totaled sharply lower to only $439 million versus the year-ago total of $809 million.

According to the Bangko Sentral ng Pilipinas, foreign investor placements for the period aggregated $330 million versus withdrawals of only $76 million.

Profits derived by foreign investors from their business ventures in the Philippines and subsequently plowed right back, also known as reinvested earnings, proved lower during the quarter to only $185 million versus year-ago reinvestments totaling $256 million.

Such reinvested foreign investor profits stabilized and totaled $57 million in March from $58 million in February and $71 million in January.

Also during the first three months, the various foreign investors with long-horizon views of the Philippines and its prospects down the line settled far fewer debts owed from their foreign principals totaling only $412 million.

This compared against $907 million worth of debts the foreign-owned Philippine subsidiaries owed their overseas principals a year earlier.

The declining number indicates that the foreign-owned Philippine subsidiaries paid down far fewer loans owed this time around from their principals domiciled overseas.

Equity capital placements during the period, which were sourced mainly from the United States, Japan, Singapore, Spain, and Germany, were channeled primarily to manufacturing; electricity, gas, steam and air-conditioning supply; real estate; financial and insurance; and wholesale and retail trade activities.