The country’s net foreign direct investments (FDI) went up by 7.5 percent year-on-year to $5.256 billion as of end-July versus $4.888 billion same period in 2023, driven by investor confidence in the local economy’s growth momentum.

For just the month of July, net inflows which are equity capital, reinvestment of earnings and borrowings, increased by 5.5 percent to $820 million compared to same time last year of $778 million.

The Bangko Sentral ng Pilipinas (BSP) said Thursday, Oct. 10, that the “improvement in FDI was driven by higher net inflows across all components” for the month of July.

Non-residents’ net investments in debt instruments grew by 2.7 percent to $610 million from $594 million last year. Net investments in debt instruments are intercompany borrowing and lending between foreign direct investors and their Philippine subsidiaries or affiliates.

The BSP also reported that non-residents’ reinvestment of earnings increased by 12.8 percent to $135 million from $120 million in July 2023 while net investments in equity capital other than reinvestment of earnings rose by 16.8 percent to $76 million from $65 million.

FDI inflows are supported by the country’s strong growth prospects, decelerating inflation and reforms intended to increase foreign investments.

From January to July, the cumulative reinvestment of earnings declined by 3.2 percent to $648 million from $670 million in 2023. The net debt instruments also dipped by 2.3 percent to $3.335 billion compared to same time last year of $3.414 billion.

Non-residents’ net investments in equity capital other than reinvestment of earnings however increased by 58.3 percent to $1.273 billion versus $804 million last year.

For the first seven months, equity capital placements mostly came from investors based in the United Kingdom with 48 percent share of the total while Japanese investors have 34 percent and US-based investors accounted for seven percent of the total FDIs. About 76 percent of FDIs were invested in the manufacturing sector and 10 percent in the real estate sector.

For the month of July only, bulk or 73 percent of equity capital placements came from Japanese investors followed by US investors with 13 percent and Singaporean investors with eight percent. The manufacturing sector siphoned off 71 percent of the July FDIs while 17 percent were invested in the real estate sector.

FDIs as equity capital, reinvestment of earnings and borrowings as registered by the BSP are actual investment inflows unlike the investment data of other government sources which have yet to materialize.

FDIs are investments by a non-resident direct investor in a resident enterprise with at least 10 percent in equity capital. It also includes investment made by a non-resident subsidiary or associate in its resident direct investor.

The BSP is projecting net FDIs will climb to $10 billion this year. For 2025, net FDIs are expected to reach $10.5 billion.

In 2023, net FDIs totaled $8.86 billion, down from $9.4 billion in 2022.

The BSP has recently revised its FDI projections higher along with better estimates for the country’s balance of payments (BOP) position and growth prospects.

Based on its latest review, the BSP expects BOP to be in surplus of $2.3 billion by end-2024, supported by inflows due in part to a recovering global and local economy.

For this year, the government is targeting gross domestic product growth of six percent to seven percent and 6.5 percent to 7.5 percent in 2025.

The BSP said generally, the local economy is expected to maintain its growth momentum because of domestic demand, lower inflation and the timely enactment of the national budget.