The job-generating foreign direct investments (FDIs) yielded net inflows of $8.6 billion in the first 11 months of 2024, up 4.4 percent from $8.2 billion a year earlier despite the lower figure in November, the Bangko Sentral ng Pilipinas (BSP) said Monday.
Data from the BSP showed that net inflows in November 2024 reached $901 million, representing a 19.8-percent decline from $1.1 billion net inflows seen in November 2023.
FDI includes investment by a nonresident direct investor in a resident enterprise, where the equity capital in the latter is at least 10 percent. The BSP’s FDI statistics cover actual investment inflows.
Breaking down the FDI component, nonresidents’ net investments in debt instruments contracted by 17.9 percent to $791 million in November 2024 from $964 million in November 2023.
Nonresidents’ net investments in equity capital (other than reinvestment of earnings) declined by 58.9 percent to $35 million from $85 million. Reinvestment of earnings remained broadly stable at $74 million.
The bulk of the equity capital placements in November 2024 came from Japan, the United States and Singapore. “These investments were primarily channeled into the manufacturing, real estate, financial and insurance, and administrative and support service industries,” the BSP said.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the increased FDIs in the 11-month period could have been brought about by some realized investment commitments made for more than two years during the various foreign trips of the administration.
“For the coming months, possible further cuts in the U.S./global/local policy rates expected from 2025-2027, especially if inflation remains well anchored within inflation target of the central bank, could also lead to further pick up/improvement in FDIs eventually,” said Ricafort.
Ricafort said the CREATE MORE Act and the expected further rate cuts by the Fed and the BSP could attract more FDIs into the country.
“However, offsetting risk factors for future FDI data would be possible more protectionist policies by a Trump presidency starting on Jan. 20, 2025 that would discourage some U.S. companies from investing and creating more jobs outside the U.S., as well as a potential trade war between the U.S. and China/other countries that could slow down the world economy and global trade, which could be a potential drag on FDIs into the country,” he said.