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Friday, March 29, 2024

Foreign direct investments hit record $10.5b last year

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Net inflows of foreign direct investments reached a record $10.5 billion in 2021, breaching the previous high of $10.3 billion in 2017, on the back of sustained investors’ confidence on the domestic economy, the Bangko Sentral ng Pilipinas said Thursday.

The 2021 level represented a 54.2-percent increase from the $6.8-billion net inflows in 2020. It also surpassed the $8-billion target for the year set by the BSP.

“The growth in FDI reflected continued positive foreign investor sentiment on the country amid expectations of a rebound in domestic economic activity and declining COVID-19 reported cases, as well as the strengthening of the global economy,” the BSP said in a statement.

Net inflows sustained its growth momentum in December, increasing by 59.0 percent year-on-year to $1.1 billion from $671 million a year ago.

The cumulative net inflows in 2021 rose on the back of the 80.4-percent expansion in non-residents’ net investments in debt instruments to $7.5 billion from $4.2 billion in 2020.

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Reinvestment of earnings grew by 34.7 percent to $1.3 billion from $944 million. Non-residents’ net investments in equity capital other than reinvestment of earnings registered a moderate growth of 0.7 percent and settled at $1.7 billion.

Equity capital placements amounted to $2.1 billion, while withdrawals stood at $399 million. Equity capital placements originated mostly from Singapore, Japan, the United States and the Netherlands. Capital infusions were channeled mainly to manufacturing; electricity, gas, steam, and air-conditioning; financial and insurance; and real estate industries.

“The increase in the FDI net inflows in December 2021 was mainly due to the 60.0 percent growth in non-residents’ net investments in debt instruments to $634 million from $396 million in December 2020,” the BSP said.

Non-residents’ net investments in equity capital registered a 59.5-percent upturn in December to $336 million from $211 million in the month in 2020.

Net investment in equity capital rose as equity capital placements climbed to $371 million from $231 million, offsetting the rise in equity capital withdrawals to $35 million from $20 million.

Equity capital placements in December came mostly from Singapore, Japan and the Netherlands. These were directed to the electricity, gas, steam and air-conditioning; manufacturing; and financial and insurance industries.

The BSP statistics on FDIs are actual investment inflows in the form of equity capital, reinvestment of earnings and borrowings. The approved foreign investments data that are published by the Philippine Statistics Authority, which are sourced from investment promotion agencies, represent investment commitments, which may not necessarily be realized fully in a given period.

The BSP expects FDI net inflows to reach $8.5 billion in 2022.

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