Net inflows of foreign direct investments (FDI) climbed to $660 million in September, although this was the lowest in four months as the elevated number of coronavirus disease 2019 (COVID-19) cases dampened investor sentiment. 

Data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed FDIs increased 30.4% year on year to $660 million in September from $506 million.  

However, this was down 23.8% from the $866 million in August and the lowest since the $448 million inflows seen in May.  

The year-on-year increase in FDI net inflows reflected the low base effect and the improvement in economic activities as restrictions were gradually relaxed, said Ser Percival K. Peña-Reyes, associate director at the Ateneo de Manila University Center for Economic Research and Development (ACERD). 

“Compared to a year ago, understandably we were coming from the pandemic and the low base comparison. Also, the economy has been reopening,” he said in a phone call.  

However, Mr. Peña-Reyes said COVID-19 cases remained high in September, and there was uncertainty over efforts to contain the surge.  

“It’s only now that we are seeing numbers improve,” he said. 

He added the country’s lower ranking in a digital competitiveness index during the month may have also made it less attractive to foreign investors.  

According to IMD business school’s World Digital Competitiveness Ranking 2021, the Philippines fell two spots to 57th place due to lower scores in future readiness, technology and knowledge.  

BSP data showed foreign investments in debt instruments surged 60.2% to $538 million in September from $336 million during the same month a year ago.  

Reinvestment of earnings also went up 25.2% to $89 million during the month from $71 million a year earlier.  

On the other hand, FDIs in equity capital slumped 67.4% to $32 million in September from $99 million. Placements dropped 22.3% to $88 million from a year earlier, while withdrawals surged by nearly four times to $56 million.  

Investments in equity and investment fund shares likewise shrank 28.5% to $121 million from $170 million in September 2020.  

For the first nine months, FDI inflows stood at $7.288 billion, rising 43.8% from the $5.068 billion a year ago.  

Ateneo’s Mr. Peña-Reyes flagged the Omicron variant, which is said to be more transmissible, as a main threat to investor sentiment.  

“We still don’t know how big its impact will be. But if we are able to succeed in terms of pandemic management because we are already here for two years and if we can master [virus] containment strategies, it will be good for FDIs,” he said.  

In a briefing, central bank officials on Friday said it now expects FDIs to reach $8 billion this year. It previously expected $7-billion FDI inflows for the full year. — Luz Wendy T. Noble