FDI net inflows up 48% at end February

The central bank registered $2.271 billion of foreign direct investment (FDI) net inflows for the first two months of 2024, up by 48.2 percent compared to same period in 2023, based on the latest data.

“The growth in FDI reflects sustained investor confidence in the country’s macroeconomic fundamentals and resilience amid persistent inflationary pressures and global economic uncertainties,” according to the Bangko Sentral ng Pilipinas (BSP).

The reported FDIs as registered with the BSP are actual investments in the form of equity capital, reinvestment of earnings, and borrowings. It 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.

For the month of February alone, the BSP said net FDIs posted a 29.3 percent growth year-on-year to $1.364 billion from $1.055 billion in 2023.   

It noted that this development was due to the 927.3 percent expansion in non-residents’ net investments in equity capital other than reinvestment of earnings to $764 million from $74 million same month last year.

The said growth in FDI inflows was tempered by the 41.5 percent contraction in non-residents’ net investments in debt instruments, which amounted to $533 million in February versus from $912 same time in 2023, said the BSP.

As to the reinvestment of earnings, this fell by 3.8 percent to $66 million from $69 million in the previous year.

“Bulk of the equity capital placements during the reference month came from the Netherlands with investments directed mostly to the financial and insurance industry,” said the BSP.

For the first two months, non-residents’ net investments in debt instruments reached $1.353 billion, 11.6 percent higher compared to 2023’s $1.212 billion. As defined by the central bank, net investments in debt instruments are mainly  intercompany borrowing and lending between foreign direct investors and their subsidiaries and affiliates in the Philippines.

Meanwhile, the cumulative reinvestment of earnings went up by 7.4 percent to $165 million versus $154 million in the same period in 2023.

As to the two-month non-residents’ net investments in equity capital other than reinvestment of earnings, this increased by 350 percent to $753 million compared to $167 million last year.

The BSP said during the period, about 80 percent of equity capital placements came from investors based in the Netherlands, and 13 percent from Japan. These investments were then channeled to these sectors: 82 percent in financial and insurance; eight percent in manufacturing; and four percent in real estate.

The BSP forecasts a 2024 and 2025 net FDI of $9 billion for each year.

Last year, net FDIs amounted to $8.9 billion, lower than $9.4 billion in 2022.

The BSP said 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.