FDI records $727 million net inflows in March
Foreign direct investment (FDI) recorded $727 million net inflows in March, albeit 9.8 percent lower than the $806 million net inflows posted in the same period last year.
Notwithstanding, net FDI flows for the first quarter remained positive, increasing by 2 percent to $2.4 billion. Higher net inflows from intercompany borrowing/lending between foreign direct investors and their subsidiaries continued to make up for the lower net inflows from new equity and reinvested earnings.
While the country’s macroeconomic fundamentals remain sound, external risks, such as the impact of Russia’s invasion of Ukraine on commodities and financial market condition, the start of policy tightening in several major central banks and the resurgence of COVID-19 cases in many Asian economies, may have contributed to investors’ concern about the outlook on the global economic recovery.
In particular, non-residents’ net cumulative investments in debt instruments for the first quarter grew by 33.5 percent to $1.9 billion from $1.4 billion in the same period in 2021.
Meanwhile, non-residents’ net investments in equity capital (other than reinvestment of earnings) and their reinvestment of earnings were lower by 57.6 percent (at $311 million) and 2.7 percent (at $229 million), respectively.
Specifically, equity capital placements dropped by 58.1 percent to $352 million (from US$840 million), which was slightly offset by the 61.1 percent decline in withdrawals to $42 million (from $107 million).
Bulk of the equity capital placements during the period came from Japan, the United States, Kuwait, and Singapore. These investments were channeled mainly to manufacturing; real estate; and financial and insurance industries.
The sustained FDI net inflows in March came largely from non-residents’ net investments in debt instruments of local affiliates, which expanded by 45.1 percent to $543 million from $374 million in March 2021.
Meanwhile, non-residents’ net investments in equity capital (other than reinvestment of earnings) fell by 69.6 percent to $106 million from $349 million in the same month last year.
This resulted as equity capital placements contracted by 68.7 percent to $118 million from $378 million, but was somewhat mitigated by the 58.2 percent decline in equity capital withdrawals to $12 million from $28 million.
Equity capital placements were sourced primarily from Japan, the United States, and Singapore. These were infused largely to manufacturing, real estate and financial and insurance industries.
Reinvestment of earnings declined by 5.4 percent to $78 million from $82 million. BSP
