Foreign direct investments (FDIs) may decline by half this year as investors continue to hold back their business plans amidst the global economic recession, according to the central bank.

The Bangko Sentral ng Pilipinas (BSP) said Friday FDIs would fall to $700 million in 2009 from $1.4 billion in 2008, but portfolio inflows would recover to $600 million from an outflow of $3.7 billion last year as financial markets stabilize.

FDIs usually go to capital- and labor-intensive industries such as power, telecommunications, mining and business process outsourcing. They are less volatile than portfolio inflows, which represent foreign investments in Philippine stocks and bonds.

BSP deputy governor Diwa Guinigundo noted that the central bank was making "conservative" estimates this year, counting only FDIs that were already in the pipeline and scheduled to come in. He said they usually include pending applications in various investment agencies, but decided not to do it this time because of strong risk aversion.

He added the latest projections were already factored in to the projected gross international reserve level of $38 billion for 2009 and the balance of payments level of $700 million.

Meanwhile, Guinigundo said the BSP was seeing a significant increase in investments classified as "other accounts" which include project and program borrowings of the national government as well as inter-company borrowing between Philippine companies and their foreign principals.

"Last year we saw a $3.1-billion outflow in other accounts because companies here were paying back loans to their parent companies," Guinigundo explained.

"This year we are seeing a higher propensity for them to borrow from parent companies. In the first two months of the year, there were more borrowings by domestic banks from their parents abroad, for instance."

Guinigundo said the "other accounts" also included about $500 million in additional borrowing by the government and about $100 million worth of program loans from multilateral lenders.

Together with $16.4 billion worth of remittances, Guinigundo said these inflows would lead to the projected $4.1-billion surplus in the current account of the balance of payments in 2009.

Banks and credit rating agencies have been projecting remittances to decline anywhere between 6 percent and as much as 25 percent, reflecting job losses and declining income for Filipinos working abroad.

But Guinigundo said they are maintaining their zero growth projection for remittances this year.

"We think remittances would go down a lot slower than most market analysts believe." he added.