Metro Manila (CNN Philippines, August 10) — Foreign direct investments (FDIs) that flowed into the country fell in May with the global surge in COVID-19 infections sending jitters among investors, the Bangko Sentral ng Pilipinas reported on Tuesday.
The BSP said FDIs reached $429 million for the month, a slump of 25.4% from May last year. This is the lowest monthly value since April 2020, which saw the inflows reaching $317 million.
Still, the latest figure brought cumulative FDIs for the first five months of 2021 to $3.5 billion — an increase of 37.8% over the amount in the same period last year.
“The FDI decline in May 2021 reflected renewed investor concerns on the rising cases of the new variants of COVID-19 globally,” the central bank said. Many countries have reported surges in infections, said to be driven by variants like the Alpha, Beta and more recently the highly transmissible Delta.
Of the FDIs that entered the country in May, investments in debt instruments reached $269 million, down by 23.4% from May 2020. Equity capital placements plummeted by 53.4% to $60 million. Reinvested earnings, on the other hand, increased by 6%, according to the BSP.
The BSP said most investments in equity capital last May came from Japan, the United States and Malaysia and were primarily channeled to the manufacturing, real estate, and financial and insurance industries.
“Optimism over the signing of the CREATE into law since March 26, 2021 could have somewhat faded and overshadowed by the relatively higher new coronavirus cases since March 2021 despite the start of the country’s vaccination vs. COVID-19 back then,” RCBC chief economist Michael Ricafort said.
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Ricafort also cited progress in proposed amendments to key measures like the Retail Trade Liberalization Act along with efforts to further re-open the economy safely by reducing COVID-19 infections and ramping up vaccine rollouts as factors that could further attract FDI inflows.
