The country’s net foreign direct investment (FDI) inflows for the first 11 months of 2023 declined by 13.3 percent to $7.581 billion from $8.741 billion in the same period in 2022 because of the lingering uncertainty in the world economy, particularly on the inflation outlook.

The reported FDIs as registered with the Bangko Sentral ng Pilipinas (BSP) are actual investments in the form of equity capital, reinvestment of earnings, and borrowings.

The BSP on Monday, Feb. 12, said that “notwithstanding the country’s sustained economic growth, FDI remained subdued due to the lingering impact of high inflation and low growth prospects globally.”

For the month of November alone, net FDI totaled $1.048 billion, up by 27.8 percent from November 2022’s $820 million.

The improvement was attributed to the 57.8 percent growth in non-residents’ net investments in debt instruments of $897 million versus $568 million same time in 2022.

As for non-residents’ net investments in equity capital other than reinvestment of earnings, this dropped by 52.5 percent year-on-year to $85 million while reinvestment of earnings dipped 8.1 percent year-on-year to $66 million in November last year.

Equity capital placements came from investors in Japan and the US. Majority of these funds or 49 percent were placed in the manufacturing sector; 16 percent in the real estate businesses; and 15 in construction industries.

For the January to November period, net investments in debt instruments decreased by 11.3 percent year-on-year to $5.465 billion while net equity investments other than reinvestment of earnings also decreased by 36.4 percent year-on-year to $1.104 billion. The reinvestment of earnings for the first 11 months also dropped by 6.5 percent year-on-year to $1.011 billion.

The registered FDIs were investments that came from Japan, US, Singapore and Germany. About 50 percent of FDIs were investments in the manufacturing sector; 15 percent in the real estate sector; 12 percent in the financial and insurance sector; and 24 percent in other industries.

FDI includes investment by a non-resident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent, said the BSP.

These FDIs are also investments made by a non-resident subsidiary or associate in its resident direct investor.

The BSP forecasts a 2023 net FDI of $9 billion and $11 billion for 2024.

In 2022, net FDIs amounted to $9.366 billion, down 22 percent from $11.983 billion in 2021.

The BSP reiterated that its FDI statistics are distinct from the investment data of other government sources since the central bank’s report covers actual investment inflows. 

“By contrast, the approved foreign investments data that are published by the Philippine Statistics Authority (PSA), which are sourced from Investment Promotion Agencies (IPAs), represent investment commitments, which may not necessarily be realized fully, in a given period,” said the BSP.