FDI Net Inflows at US$657 Million in January 2020, Higher than Last Year

Foreign direct investment (FDI) net inflows grew by 12.1 percent in January 2020 to reach US$657 million from US$586 million posted in January 2019.1,2 This development, which was before the imposition of the community quarantine in the country due to COVID-19, reflects continued investor confidence in the Philippine economy, despite global economic uncertainties. The increase in FDI during the month was boosted by net inflows of equity capital, amounting to US$352 million, a reversal from net withdrawal of US$43 million in January 2019.

In particular, equity capital placements more than doubled to US$373 million (from US$186 million), while withdrawals decreased by 90.7 percent to US$21 million (from US$229 million). Equity capital placements during the month originated largely from the Netherlands and Singapore. These were invested mostly in the manufacturing and real estate industries.

Meanwhile, net investments in debt instruments issued by local affiliates (consisting mainly of intercompany borrowings) fell by 57.9 percent to US$233 million from US$553 million a year ago. Likewise, reinvestment of earnings declined moderately by 5.1 percent to US$72 million during the month from US$76 million.

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1 The BSP statistics on FDI are compiled based on the Balance of Payments and International Investment Position Manual, 6th Edition (BPM6).  FDI includes (a) investment by a non-resident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent, and (b) investment made by a non-resident subsidiary/associate in its resident direct investor.  FDI can be in the form of equity capital, reinvestment of earnings and borrowings.

2 The BSP FDI statistics are distinct from the investment data of other government sources. BSP FDI covers actual investment inflows. By contrast, the approved foreign investments data that are published by the Philippine Statistics Authority (PSA), which are sourced from Investment Promotion Agencies (IPAs), represent investment commitments, which may not necessarily be realized fully, in a given period. Further, the said PSA data are not based on the 10 percent ownership criterion under BPM6.  Moreover, the BSP’s FDI data are presented in net terms (i.e., equity capital placements less withdrawals), while the PSA’s foreign investment data do not account for equity withdrawals.

 

Source: Bangko Sentral ng Pilipinas (BSP)