NET inflows of foreign direct investments (FDI) reached $907 million in January 2024, up by 89.9 percent from the $478-million net inflows seen in the same month last year, the Bangko Sentral ng Pilipinas (BSP) said Wednesday.
The increase in FDI was supported mainly by the 173.2-percent expansion in non-residents’ net investments in debt instruments to $820 million from $300 million in January 2023.
Reinvestment of earnings also increased by 16.4 percent to $99 million from $85 million.
Meanwhile, non-residents’ net investments in equity capital (other than reinvestment of earnings) posted net outflows of $11 million in January 2024 from the $93-million net inflows in January 2023.
Equity capital placements during the period came largely from Japan and the United States.
The BSP said the investments went mostly to manufacturing, real estate, construction and wholesale and retail trade industries.
“The latest year-on-year improvement in the FDI data, still among pre-pandemic highs, may have to do with improved economic and financial markets performance in recent months, such as the easing headline inflation trend towards the central bank targets that could support/justify Fed rate cuts and local policy rate cuts later in 2024,” said Michael Ricafort, chief economist of Rizal Commercial Banking Corp.
“Philippine economic growth is among the fastest in ASEAN/Asia and long-term US and local interest rates already eased from the immediate highs since November 2023, thereby encouraging more FDIs to come into the country amid favorable demographics and lower long-term interest rates/borrowing costs that help boost investments globally, including FDIs into the country,” he said.
Ricafort said the increased FDIs could have also partly been brought about by some realized investment commitments made during the various foreign trips of the administration. “For the coming months, possible cuts in the US/global/local policy rates later in 2024, if inflation remains well anchored within inflation target of the central bank, could also lead to some pick up in FDIs eventually,” he said.