RELATED: Recovery from huge economic losses due to pandemic will take years, ADB says
Metro Manila (CNN Philippines, July 22) – Foreign direct investments plunged by 68 percent in April, with market players putting business plans on hold as the COVID-19 pandemic drags on.
The Bangko Sentral ng Pilipinas said the country received $311 million investment inflows for the month, the lowest since May 2019. Investments likewise dropped from the $507 million level in March.
“The slowdown in FDI inflows reflected the continued weak global and domestic demand prospects prompting many investors to put on hold investment plans amid the unresolved COVID-19 pandemic,” the central bank said in a statement.
The entry of foreign investments boost capital for local business expansions and often mean the opening of more job opportunities for Filipinos.
Investments have been on a steady decline since the start of the year when COVID-19 spread globally, triggering lockdowns and paralyzing economies for months. In the Philippines, April marked the first full month under lockdown, which stretched on to more than two months for Metro Manila, the biggest economic hub.
Investments dropped across all instruments, with equity and debt placements seeing the biggest declines from a year ago.
Investments in debt instruments, such as bonds and treasury notes, settled at $223 million in April, barely a fourth of where it was a year ago. Meanwhile, bets on equity netted just $7 million, a sharp 82.6 percent decline from a year ago.
Gross placements went down by 68.3 percent to $47 million, which was partly cancelled out by withdrawals worth $39 million.
Preferred sectors were manufacturing, wholesale and retail trade, and real estate industries. Investors from Japan, the United States, Singapore and Germany continued to pour funds into local investment channels.
Meanwhile, reinvested earnings –– which refer to profits made by global companies in local operations retained here –– stayed relatively steady at $81 million, although still lower than the $96 million retained a year ago.
As a result, the four-month FDI tally remained depressed. Funds mostly went into additional capital for manufacturing, real estate, and administrative and support service industries.
The BSP expects FDIs to ease this year as investors hold on to cash during the pandemic, with the country seen raking in just $4.1 billion compared to $7.6 billion infused by investors a year ago.
That brought the four-month FDI tally to $1.98 billion, down by a third from the $2.92 billion haul recorded in January-April 2019
READ: Duterte wants a cautious reopening of Philippine economy amid rising COVID-19 cases in the country
