Metro Manila (CNN Philippines, June 11) — Foreign investments declined in February as investors opted to stay on the sidelines due to the coronavirus outbreak, the Bangko Sentral ng Pilipinas reported on Thursday.
The BSP reported net inflows of foreign direct investment (FDI) amounted to $505 million in February, a 31.5 percent drop from the same month last year.
“FDI declined as uncertainties on the impact of the COVID-19 outbreak dampened investor sentiment,” said the central bank in a media release.
While foreign investments rose to $657 million in January, it wasn’t enough to pull the total investment inflows for the first two months of the year up. Combined FDI net inflows for both months amounted to $1.2 billion, which was 12.2 percent less than the year-ago amount.
“[T]he COVID-19 pandemic deterred investors from coming into the Philippines and remaining in their country of domicile,” said Luis Limlingan, managing director of Regina Capital. “Though the lockdown was enacted during the 2nd week of March, the spread of the virus began much earlier in Asia in countries such as China and Japan.”
Equity capital placements also worsened in February, reaching $129 million, a 43 percent fall from the $227 million recorded last year. The placements came mostly from Singapore, Japan, and United States and were channeled mainly into manufacturing, real estate, and wholesale and retail trade industries.
February also saw less investments on debt instruments at $317 million, a 26.4 percent decrease from the $431 million posted last year.
Reinvested earnings went down to $59 million during the month, from $80 million recorded in February 2019.
In a bid to attract more foreign investments, the Finance Department is pushing for the immediate passage of the Corporate Recovery and Tax Incentives for Enterprises Act, more popularly known as CREATE.
One of the key provisions of the proposed measure is to lower corporate income tax rates from 25 percent from the current 30 percent rate by July, which shall bring the country closer to the regional average.
