FDI rebound sign of recovery


    The Department of Finance (DOF) said the recovery of foreign direct investments (FDIs) following the initial implementation of strict lockdown measures suggests investor confidence for the country’s long-term prospects.

    The DOF in its economic bulletin over the weekend said FDIs for the month of July posted a 35.1 percent growth year-on-year, from $590 million last year to $797 million in 2020, based on preliminary data.

    FDI has also recorded month-on-month growth in May, June and July this year, after posting contractions in previous months.

    “Although strict quarantine measures implemented in the final weeks of the first quarter may have put FDI inflows temporarily on hold, the quick recovery of FDI in the subsequent months suggests that the Philippines’ long-term prospects remain positive in the eyes of investors,” the DOF said.

    The Philippine government started implementing community quarantine measures in mid-March. The lockdown levels have been gradually eased since then.

    FDI for the first seven months of the year amounted to $3.8 billion, down 10.9 percent from $4.26 billion in the same period last year.

    The DOF said year-on-year decreases in reinvestment of earnings and net debt instruments of 20.9 percent and 27.1 percent, respectively, mitigated the 111.1 percent growth in net equity capital investments for the period.

    Net equity capital investments for the period were primarily in the manufacturing, real estate, financial and insurance and administrative and support service industries, the DOF said.

    “Moving forward, sustaining investment-incentivizing activities such as making doing business easier and continuing to invest in infrastructure will be key to attracting more investment into the country,” the DOF said.

    Reforms such as Corporate Recovery and Tax Incentives for Enterprises Act, Financial Institutions Strategic Transfer and Passive Income and Financial Intermediary Taxation Act, along with amendments to the Commonwealth-era Public Service Act and the Retail Trade Liberalization Act will also help encourage more foreign investments which, in turn, will expand consumer choices and the pool of employers, the agency added.