Foreign direct investments (FDIs) in February rose by 46.3 percent year-on-year to $893 million net inflows from $611 million on account of non-residents’ net investments in debt instruments, said the Bangko Sentral ng Pilipinas (BSP).
Based on BSP data on a cumulative basis, net FDI reached $1.71 billion in the first two months of 2022, up by eight percent from $1.58 billion in the same period in 2021. The BSP said the growth in FDI was due to the infusion of funds by non-resident direct investors to their local subsidiaries.
“Specifically, the expansion in the January-February 2022 net inflows was due mainly to the 29.3 percent growth in non-residents’ net investments in debt instruments to $1.4 billion from $1 billion in the comparable period last year,” said the BSP on Wednesday, May 11. Net investments in debt instruments, as defined by the BSP, consist mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines.
The BSP said reinvestment of earnings for the first two months was “broadly stable” at $152 million, down by 1.2 percent year-on-year.
Non-residents’ net investments in equity capital other than reinvestment of earnings also fell by 46.7 percent to $204 million from $383 million. “This resulted as equity capital placements declined by 49.4 percent,” noted the BSP. Equity capital placements dropped to $234 million as of end-February which “more than offset the 62.1 percent drop in withdrawals to $30 million (from $79 million),” it added.
Equity capital placements came from investors from Japan, the US, and Kuwait, and invested in these sectors: manufacturing; financial and insurance; and real estate industries.
For the month of February only, the BSP said the 46.3 percent increase was backed by the 40.8 percent year-on-year growth in non-residents’ net investments in debt instruments of local affiliates of $722 million.
Non-residents’ net investments in equity capital other than reinvestment of earnings also grew by 320.1 percent to $97 million from $23 million in 2021.
Equity capital placements rose by 26.5 percent to $116 million while equity capital withdrawals contracted by 72.4 percent to $19 million, said the BSP.
Investors from Kuwait, Japan, and the US contributed to the increase in equity capital. As for the reinvestment of earnings, this went down slightly to $74 million in February, down by one percent.
The BSP statistics on FDI includes investment by a non-resident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent, and investment made by a non-resident subsidiary/associate in its resident direct investor. FDI can be in the form of equity capital, reinvestment of earnings, and borrowings.