Foreign direct investments drop to $6.5 billion in 2020

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Foreign direct investments (FDIs), an indicator of an economy’s health, decreased by almost 25 percent in 2020 compared to 2019, with the Bangko Sentral saying this was caused by coronavirus disease 2019 (Covid-19) pandemic.

 

The BSP said that FDIs in 2020 amounted to $6.5 billion, or a decrease of 24.6 percent from the $8.7 billion net inflows in 2019. The figure last year was the lowest for FDIs since 2015’s $5.63 billion.

“The disruptive impact of the pandemic on global supply chains and the weak business outlook adversely affected investor decisions in 2020,” the BSP said.

 

However, the 2020 FDI figure surpassed BSP’s $6-billion forecast for 2020.

 

By component, nonresidents’ net investments in debt instruments went down by 22 percent to $4.1 billion in 2020 from the $5.2 billion in 2019. Furthermore, nonresidents’ net equity capital investments dropped by 35.7 percent to $1.5 billion in 2020 from $2.3 billion.

 

The bulk of the equity capital placements in 2020 came from Japan, the Netherlands, the United States and Singapore, with their capital infusions invested in the manufacturing, real estate, and financial and insurance industries.

 

Meanwhile, reinvestment of earnings declined by 13.6 percent to $978 million from $1.1 billion in 2019.

 

To help the Philippines attract more FDIs this year and over the long term, Congress is pushing amendments to the restrictive economic provisions of the 1987 Constitution. Among the restrictions is limiting to 40 percent the participation of foreign investors in certain industries.

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