FDIs rise 18.8% to $4.2 B in Jan-May 2022

Published August 10, 2022, 2:21 PM

by Lee C. Chipongian

Foreign direct investments (FDIs) registered with the central bank grew 18.8 percent to $4.17 billion as of end-May this year as against $3.5 billion in the same period last year.

The Bangko Sentral ng Pilipinas (BSP) said on Wednesday, Aug. 10, that FDI net inflows for the month of May rose 64.1 percent to $742 million versus $452 million in 2021.

US dollar/Manila Bulletin file photo

“The year-to-date growth was mainly on account of the increase in non-residents’ net investments in debt instruments, which muted the decline in net equity capital placements (other than reinvestment of earnings),” said the BSP.

For the month of May, non-residents’ net investments in debt instruments and equity capital of their local affiliates boosted FDIs.

The BSP said bulk of equity capital placements were sourced from investors located in Japan, the US, Singapore and the Netherlands.

For the January to May period, FDIs were invested in the following sectors: 30 percent in the manufacturing sector; 20 percent in real estate; 15 percent in construction; and 13 percent in financial and insurance sector. About 22 percent were invested in other sectors.

FDIs can be in the form of equity capital, reinvestment of earnings, and borrowings.

As of end-May, net investments in debt instruments increased by 42.7 percent to $3.13 billion from $2.19 billion same period in 2021. Net investments in debt instruments consist mainly of intercompany borrowing and lending between foreign direct investors and their subsidiaries and affiliates in the Philippines.

Net investments in equity capital other than reinvestment of earnings declined by 31.3 percent to $607 million from $885 million while reinvestment of earnings were slightly unchanged at $435 million from $434 million previously.

Equity capital placements also declined by 34.2 percent to $679 million from $1.03 billion in 2021.

The BSP is projecting net FDI to reach $11 billion this year. In 2021, net inflows increased to an all-time high of $10.52 billion, up by 54.2 percent from $6.82 billion in 2020. The previous record level was $10.3 billion in 2017.

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 or associate in its resident direct investor.