The Philippines experienced a significant decline in net foreign direct investments (FDI) during the first six months of the year, with data from the Bangko Sentral ng Pilipinas (BSP) indicating a drop of 20.4 percent to $3.911 billion.
This decline has been attributed to ongoing concerns among investors regarding weak growth prospects amidst persistent global uncertainties.
FDI, as defined by the BSP, includes investments made by non-resident direct investors in resident enterprises, with equity capital of at least 10 percent. It also encompasses investments by non-resident subsidiaries or associates in resident direct investors.
These FDI figures, comprising equity capital, reinvestment of earnings, and borrowings, are recorded by the BSP and are distinct from investment data from other government sources.
In June alone, net FDI inflows decreased by 3.9 percent to $484 million, due to reductions in non-residents’ net investments in equity capital, excluding reinvestments of earnings, as well as their reinvestment of earnings.
Equity investments other than reinvestment earnings for June fell by 11.8 percent to $111 million while reinvestment of earnings saw a 26.8 percent drop to $89 million.
However, net investments in debt instruments for June increased by 11 percent to $283 million.
During the first half, FDI net inflows, which fell by 20.4 percent year-on-year, predominantly came from investors in Japan, Germany, the United States, and Singapore. Over this period, 54 percent of FDIs were allocated to the manufacturing sector, 15 percent to real estate, and 10 percent to the financial and insurance sector.
For the six-month tally, net investments in debt instruments fell by 24.6 percent to $2.708 billion. Net equity investments, excluding reinvestment of earnings, also decreased by 7.3 percent to $744 million.
The BSP’s estimates for 2023 project FDI to reach $9 billion by year-end, with further increases expected to $11 billion in the following year.
