The Bangko Sentral ng Pilipinas (BSP) registered higher net foreign direct investments (FDI) of $6.657 billion at the end of the third quarter, up 3.8 percent from $6.416 billion in the same period last year.

However, net FDI for September declined by 36.2 percent to $368 million from $577 million in the same month of 2023.

FDI comprises equity capital, reinvestment of earnings, and borrowings. As registered by the BSP, these represent actual investment inflows, unlike investment data from other government sources, which may not have materialized.

The BSP, on Tuesday, Dec. 10, said net FDI declined in September as non-residents’ net investments in debt instruments dropped by 32.8 percent to $277 million from $413 million. Net investments in debt instruments are mostly intercompany borrowing and lending between foreign direct investors and their subsidiaries and affiliates in the Philippines.

Non-residents’ net investments in equity capital other than reinvestment of earnings also decreased, by 91.2 percent to $7 million in September from $83 million last year.

The BSP noted that this was “mitigated slightly by the 3.6 percent growth in non-residents’ reinvestment of earnings to $84 million from $81 million (September 2023).”

Meanwhile, from January to September this year, data showed that reinvestment of earnings fell by 4.2 percent to $949 million from $991 million in the same period of 2023.

Net debt instruments also decreased by 3.3 percent to $4.351 billion from $4.502 billion the previous year.

However, non-residents’ net investments in equity capital other than reinvestment of earnings continued to increase, by 46.9 percent to $1.357 billion from $923 million last year.

For the first nine months of 2024, the majority of equity capital placements came from investors based in the United Kingdom, with a 43 percent share of the total; Japanese investors had 37 percent; US-based investors accounted for 9 percent; and Singaporean investors, 4 percent of total FDI.

About 74 percent of FDI was invested in the manufacturing sector; 11 percent in real estate; and 4 percent in wholesale and retail trade.

For September, the BSP noted that Japanese investors accounted for 60 percent of equity capital placements, followed by US investors with 25 percent and Singaporean investors with 5 percent of the total.

About 58 percent of September's net FDI went to the manufacturing sector; 19 percent to real estate; 8 percent to information and communication; and 5 percent to wholesale and retail trade.

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

These investments are also a crucial source of external financing and benefit the economy in terms of employment, technology transfer, and market integration. Generally, FDI is on an uptrend because of the country’s growth momentum and improvements in its sovereign credit rating.

The BSP forecasts net FDI will reach $10 billion by year-end and $10.5 billion in 2025. Last year, the country reported net FDI of $8.86 billion, down from $9.4 billion in 2022.

The BSP releases FDI statistics monthly and on a year-to-date basis. Some year-on-year growth rates are impacted by the entry of big-ticket items and may have base effects.