Almost Double? Foreign Direct Investments Down $797M in August 2022 vs Same Month Last Year

The net foreign direct investments (FDIs) in the Philippines reached $797 million in August 2022, almost 66 percent gained from July’s $460 million tally.

However, despite the increase from July, the FDI tally for August this year is still lower by 19.2% from last year’s $987 million for the same month.

In a press release posted by the Bangko Sentral ng Pilipinas (BSP), the Central Bank showed that the cumulative net inflows from January to August this year was $5.9 billion, a 13% decrease compared to last year’s $6.8 billion for the first eight months.

As per the monetary authority’s forecast, the country’s FDI slowdown may be due to “concerns over weakening global growth prospects, particularly with the moderating demand and policy tightening in major economies.”

“In August 2022, FDI net inflows decreased as all major FDI components posted lower net inflows, particularly non-residents’ net investments in debt instruments of their local affiliates,” BSP explained.

The Central Bank also revealed that the top countries where equity capital placements came from were Japan and the United States. But it is fewer compared to July’s top contributors, where Singapore joined Japan and the US.

It also disclosed that the majority of the investments for the said month went to the manufacturing, real estate, and information and communication industries:

“Equity capital placements during the month came mostly from Japan and the United States. Said investments were channeled largely to the 1) manufacturing; 2) real estate; and 3) information and communication industries,” BSP concluded.

As defined by the Philippine Statistics Authority, FDI is made by a resident entity in one economy (direct investor) with the objective of establishing or obtaining a lasting interest in an enterprise resident in an economy other than that of the investor. It is also a form of international investment where a foreign entity invests in, or sometimes controls the ownership of,  a local entity.

For example, an international construction company invests in a private construction firm in the country to bid for a soon-to-be road project.

Another example is an international crypto exchange that will build a local headquarters to be able to secure a license and expand its audience in the country.

This article is published on BitPinas: Almost Double? Foreign Direct Investments Rockets $797m in August from $460m in July

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