THE country's Foreign Direct Investments (FDI) for the first five months of the year dipped by more than 60 percent after jitters over the Euro-zone debt crisis remain among investors.
The Bangko Sentral ng Pilipinas (BSP) said the successful automated elections last May failed to elicit cheers from investors as FDI reached only $446 million at the end of the five-month spread, from $1.4 billion in the same period last year.
FDIs are long-term investment as opposed to portfolio investments which are placed in bonds or stocks but investors can easily transfer these funds anytime in search for short-term, high interest rate investment opportunities.
BSP recorded $35 million in net outflow last May while attributing the net inflows from the improvement in the other capital account consisting mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines.
Intercompany loan availments from foreign direct investors and lower trade credits extended to affiliates abroad supported the FDI.
Inflows during the review period came mostly from the United States, Switzerland, Japan, Netherlands, Singapore and Hong Kong and were invested to the manufacturing, services, real estate, financial intermediation, utilities, mining, and transportation/storage sectors.
Reinvested earnings also recorded net inflows of $70 million, a reversal of the $24 million net outflows posted a year ago.
The BSP expects FDIs to hit $2 billion for the whole year. (Virgil Lopez/Sunnex)