Net FDI inflows up 42% to $3 B in Q1

The Bangko Sentral ng Pilipinas (BSP) said the Philippines posted net foreign direct investment (FDI) inflows of $2.969 billion in the first quarter this year, up by 42.1 percent from same period in 2023 of $2.090 billion.

The BSP on Monday, June 10, said FDIs “increased during the quarter on the back of the country’s strong growth prospects and moderating inflation.”

For the month of March alone, net FDIs were up by by 23.1 percent year-on-year to $686 million from $557 million same time last year.

The central bank said the “expansion in FDI net inflows was driven mainly by non-residents’ net investments in debt instruments” which grew by 19 percent year-on-year to $465 million from $391 million.

It noted that non-residents’ net investments in equity capital other than reinvestment of earnings also went up by 67.1 percent in March to $157 million from $94 million.

Meanwhile, reinvestment of earnings fell by 11.3 percent to $64 million from $72 million.

The BSP said equity capital placements in March were mostly traced to investors located in Japan with 64 percent of total; Singapore with 16 percent; and the US with 10 percent. These funds were invested in the manufacturing, financial and insurance, and real estate industries.

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 first three months, non-residents’ net investments in debt instruments reached $1.830 billion, 14.2 percent higher compared to 2023’s $1.603 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.

As to the cumulative reinvestment of earnings, this went up by 1.4 percent to $229 million versus $226 million in the same period in 2023.

Non-residents’ net investments in equity capital other than reinvestment of earnings as of end-March increased by 248.5 percent to $910 million compared to $261 million last year.

Based on BSP data, about 68 percent of equity capital placements came from investors based in the Netherlands during the first quarter, and 21 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.

For this year, the BSP forecasts net FDIs of $9 billion. It is the same projection for 2025.

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