Metro Manila (CNN Philippines) — Foreign direct investments (FDI) registered net inflows of $403 million in May, according to the Bangko Sentral ng Pilipinas (BSP).
May’s figure is the highest for 2015 thus far, but 6.8 percent lower than the level reached during the same month last year.
FDI inflows have slowed down for the first five months of the year relative to 2014. On a cumulative basis, net inflows from January to May reached $1.6 billion — 41.9 percent lower than the $2.8 billion posted during the same period last year.
In a statement, the BSP pointed out that all FDI components recorded positive balances in May. Net equity capital investments more than doubled to reach $160 million from $75 million during the same month last year.
In particular, the BSP said that equity capital placements of $181 million exceeded withdrawals of $20 million. The figure is also more than twice the $86 million in May 2014.
Most of May’s capital equity investments came mostly from the U.S., Germany, Japan, Singapore, and Taiwan. The funds were mainly channeled to financial and insurance sectors; wholesale and retail trade; real estate; manufacturing; and administrative and support service activities.
Last year, FDI to the Philippines surged to an all-time high of $6.2 billion according to the BSP, equivalent to a 65.9 percent growth from 2013. The country outpaced Southeast Asia’s 5 percent expansion, and East Asia’s 10 percent increase.
However, the figures from the United Nations Conference on Trade and Development revealed that the country’s FDI lagged behind several of its Southeast Asian neighbors. At $67.5 billion, Singapore’s FDI alone was more than ten times that of the Philippines. Indonesia’s $22.6 billion FDI was more than three times that of the country, while Thailand’s $12.6 billion is doubled Philippine’s FDI.
Philippine law currently sets limits on foreign ownership in several business sectors.
For example, foreign companies can only have up to a 30 percent stake in advertising, 40 percent of shares in educational institutions, or 60 percent equity in investment houses regulated by the Securities and Exchange Commission.
But there have been signs of government reform, especially in the banking sector.
Last year, President Benigno Aquino III signed Republic Act 10641, which allows the full entry of foreign banks into the country. Likewise, they have also been allowed to own up to a 100 percent stake in local banks.
In its 2014 report on economic and financial developments, the BSP said that foreign banks can be “vehicles for foreign direct investments into the Philippines at a time when [the country has] attained investment-grade rating while also preparing further for regional (ASEAN) integration.”
