With continued investor confidence, the country’s net foreign direct investments (FDI) grew by 15.8 percent to $4.024 billion as of end-May compared to $3.475 billion same period last year.
FDIs are equity capital, reinvestment of earnings and borrowings. The Bangko Sentral ng Pilipinas (BSP) reports FDIs that are actual investment inflows unlike the approved foreign investments data by other government agencies that have not materialized yet.
Based on BSP’s latest data, for the month of May only, net FDIs totaled $499 million, one percent lower than same month last year of $504 million.
The BSP attributed the slight decline from the 31.7 percent drop in non-residents’ net investments in equity capital -- other than reinvestment of earnings -- to $161 million from $235 million in May last year.
During the month, the reinvestment of earnings also fell by 3.7 percent to $97 million from $101 million while non-residents’ net investments in debt instruments increased by 43.4 percent to $242 million versus $169 million last year.
For the five-month period, non-residents’ net investments in debt instruments reached $2.479 billion, up 1.7 percent from same period last year of $2.436 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.
The cumulative reinvestment of earnings slipped one percent lower to $407 million as of end-May compared to $411 million in 2023. Non-residents’ net investments in equity capital other than reinvestment of earnings grew 81.4 percent to $1.139 billion from $628 million.
Based on BSP data, equity capital placements in May mostly came from investors in Japan with 75 percent share of the total; US investors have 10 percent; and Hong Kong investors with seven percent.
About 55 percent of FDIs were invested in the manufacturing sector; 26 percent in the real estate sector; and six percent in the arts, entertainment, and recreation industries.
For the January to May period, 78 percent of total FDIs were invested in the manufacturing sector and nine percent in real estate.
The BSP said equity capital placements for the five-month period emanated from the United Kingdom with 56 percent share of total; Japan has 29 percent; while US investors accounted for six percent.
Last month, Netherlands emerged as the top investor country with 63 percent of the total. The BSP explained that the year-to-date country attribution from the Netherlands to UK as of end-May was because of a new supplemental information for a transaction in February this year. The BSP said this information made the UK as the primary investor country instead of the Netherlands.
The reported FDIs as registered with the BSP 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 2024, the BSP forecasts net FDIs of $9.5 billion. Next year, it is projected to reach $10.5 billion.
Last year, net FDIs totaled $8.86 billion, lower than $9.4 billion in 2022.