FDI Inflows in Philippines Declines by 13.3%

The Philippines witnessed a decline in net foreign direct investment (FDI) inflows for the first 11 months of 2023, dropping by 13.3% to $7.581 billion from $8.741 billion recorded in the same period in 2022. This downturn was primarily attributed to global economic uncertainty, particularly concerning inflation.

The Bangko Sentral ng Pilipinas (BSP) reported that these FDIs represent actual investments in various forms, including equity capital, reinvestment of earnings, and borrowings.

Despite sustained economic growth, FDI remained subdued due to the lingering impact of high inflation and sluggish global growth prospects, according to the BSP.

In November alone, net FDI totaled $1.048 billion, marking a 27.8% increase from November 2022’s $820 million. This improvement was fueled by a significant growth of 57.8% in non-residents’ net investments in debt instruments, amounting to $897 million.

However, non-residents’ net investments in equity capital other than reinvestment of earnings declined by 52.5% year-on-year to $85 million, while reinvestment of earnings dipped by 8.1% year-on-year to $66 million in November 2023.

The majority of equity capital placements came from investors in Japan and the US, with 49% directed towards the manufacturing sector, 16% in real estate, and 15% in construction industries.

From January to November 2023, net investments in debt instruments decreased by 11.3% year-on-year to $5.465 billion, while net equity investments other than reinvestment of earnings decreased by 36.4% year-on-year to $1.104 billion. Reinvestment of earnings for the same period also dropped by 6.5% year-on-year to $1.011 billion.

The BSP forecasts a net FDI of $9 billion for 2023 and $11 billion for 2024. In 2022, net FDIs amounted to $9.366 billion, down by 22% from $11.983 billion in 2021.

The BSP clarified that its FDI statistics differ from investment data from other government sources, as the central bank’s report covers actual investment inflows, while investment commitments published by the Philippine Statistics Authority (PSA) represent commitments that may not necessarily be fully realised in a given period.