January-November 2020 FDI Level Reaches US$5.8 Billion

10 February 2021
January-November 2020 FDI Level Reaches US$5.8 Billion,
10.8 Percent Lower than the US$6.5 Billion Net Inflows
in the Comparative Period in 2019

Foreign direct investments (FDI) posted net inflows of US$537 million in November 2020, a contraction by 16.5 percent from the US$643 million net inflows registered in November 2019.1,2 Nonetheless, this decline was slower compared to the 24.5 percent contraction posted in October 2020 amid news of positive developments in COVID-19 vaccines. The recent contractions in net FDI inflows were largely affected by concerns over the resurgence of COVID-19 cases and re-imposition of quarantine measures in some advanced and emerging markets.

Non-residents’ net investments in equity capital declined by 57.3 percent to US$66 million in November 2020 from US$155 million in the comparable period in 2019. This resulted as equity capital placements declined by 44.8 percent to US$96 million (from US$174 million), coupled with a 57.3 percent increase in equity capital withdrawals to US$30 million (from US$19 million). Equity capital placements came mainly from the Netherlands, Japan, and the United States. These were invested mostly in the 1) financial and insurance, 2) real estate, and 3) manufacturing industries.

The drop in total FDI net inflows was partially mitigated by the increase in non-residents’ net investments in debt instruments, which grew by 3.8 percent to US$415 million from US$400 million in the same period in 2019.[1] Reinvestment of earnings, however, fell by 36.5 percent to US$56 million from US$88 million in November 2019.

On a cumulative basis, FDI net inflows for the period January–November 2020 reached US$5.8 billion, 10.8 percent lower than the US$6.5 billion net inflows recorded in the comparable period in 2019. By component, non-residents’ net investments in debt instruments dropped by 19.3 percent to US$3.8 billion from US$4.7 billion. Reinvestment of earnings contracted by 21.9 percent to US$760 million from US$974 million. By contrast, non-residents’ net investments in equity capital expanded by 48.6 percent to US$1.3 billion (from US$851 million), which partly eased the decline in the cumulative FDI net inflows. Equity capital placements grew modestly by 0.5 percent to US$1.53 billion (from US$1.52 billion), while withdrawals declined by 60.4 percent to US$265 million (from US$671 million). Equity capital placements during the period emanated largely from Japan, the Netherlands, the United States, and Singapore. These were invested mostly to 1) manufacturing, 2) real estate, and 3) financial and insurance industries.