Net inflows of foreign direct investments rose 2 percent in the first quarter to $2.439 billion from $2.391 billion a year ago despite external challenges and the start of interest rate hikes in several countries, the Bangko Sentral ng Pilipinas said Monday.
Data showed the first-quarter net FDI figure climbed despite the 9.8-percent decline in March to $727 million from $806 million in the same month last year, as external risks heightened investors’ concern on the global economic recovery.
The BSP said the higher net inflows from inter-company borrowing/lending between foreign direct investors and their subsidiaries continued to make up for the lower net inflows from new equity and reinvested earnings.
“While the country’s macroeconomic fundamentals remain sound, external risks, such as the impact of Russia’s invasion of Ukraine on commodities and financial market condition, the start of policy tightening in several major central banks and the resurgence of COVID-19 cases in many Asian economies, may have contributed to investors’ concern about the outlook on the global economic recovery,” the BSP said.
Non-residents’ net cumulative investments in debt instruments increased 33.5 percent in the first quarter to $1.9 billion from $1.4 billion in the same period in 2021. Non-residents’ net investments in equity capital and reinvestment of earnings fell 57.6 percent to $311 million and 2.7 percent to $229 million, respectively.
Equity capital placements went down by 58.1 percent to $352 million from $840 million, which was slightly offset by the 61.1-percent decline in withdrawals to $42 million from $107 million.
The bulk of the equity capital placements in the first three months came from Japan, the United States, Kuwait and Singapore. The investments went to manufacturing, real estate and financial and insurance industries.
The sustained FDI net inflows in March 2022 came largely from non-residents’ net investments in debt instruments of local affiliates, which expanded by 45.1 percent to $543 million from $374 million in March 2021.
Net FDI inflows hit a record $10.5 billion in 2021, breaching the previous high of $10.3 billion in 2017. The 2021 level represented a 54.2-percent increase from the $6.8 billion net inflow recorded in 2020. It also surpassed the $8-billion net inflow target set by the BSP. The BSP expects FDI net inflows to reach $11 billion in 2022.
The BSP statistics on FDIs include 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/associate in its resident direct investor. They come in the forms of equity capital, reinvestment of earnings and borrowings.
The BSP figures are distinct from the investment data of other government sources. FDIs compiled by the BSP cover actual investment inflows, while the approved foreign investments data published by the Philippine Statistics Authority from investment promotion agencies only represent investment commitments, which may not necessarily be realized fully, in a given period.
