Net inflows of foreign direct investments grew 41.5 percent in January to $961million from $679 million a year ago on the positive outlook on the domestic economy, Bangko Sentral ng Pilipinas said Monday.
The BSP said in a statement the increase was supported by the 116-percent expansion in non-residents’ net investment in debt instruments to $535 million from $248 million in the same month last year.
“This development reflects the investors’ optimism at the start of the year due in turn to the gradual reopening of the economy under the ‘new normal’ condition, easing of lockdown measures, and positive news about the rollout of COVID-19 vaccines,” the BSP said.
Non-residents’ net investment in equity capital increased marginally by 0.5 percent to $351 million from $350 million in January. This resulted from continued inflows from new placements, amounting to $362 million in January 2021 from $374 million last year, coupled with less withdrawals of $10 million in January from $24 million last year.
Equity capital placements emanated largely from Singapore, Japan and the Netherlands and were channeled mostly to financial and insurance, manufacturing and professional, scientific and technical industries.
Reinvestment of earnings declined 9.2 percent to $74 million from $82 million in January.
Net inflows of foreign direct investments contracted 25 percent in 2020 to $6.5 billion from $8.7 billion in 2019, pulled down by the lingering impact of the pandemic. The figure, however, surpassed the target of $5.6 billion set by the government.
By component, non-residents’ net investments in debt instruments declined by 22 percent to $4.1 billion in 2020 from $5.2 billion in 2019 while non-residents’ net equity capital investments dropped 35.7 percent to $1.5 billion from $2.3 billion.
The BSP statistics on FDI are compiled based on the balance of payments and international investment position manual. It refers to 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. FDIs can be in the form of equity capital, reinvestment of earnings and borrowings.
The BSP expects FDIs to post a net inflow of $7 billion this year.