FDI inflows fall 29.6% in October 2023

The Philippines saw a significant 29.6 percent drop in foreign direct investment (FDI) with net inflows of $655 million in October 2023 from the $930 million net inflows registered in the same month in 2022.

The October figure has brought cumulative net FDI inflows for the period January-October 2023 period to $6.5 billion, 17.5 percent lowered, compared with the $7.9 billion in January to October 2022.

The Bangko Sentral ng Pilipinas said in a statement that the drop in FDI inflow was largely due to the 26.1 percent decrease in net investments in debt instruments during the period under review to $504 million from $682 million a year ago.

“While FDI continued to record net inflows, the recent decline in levels reflect the adverse impact of persistent inflationary pressures and slowing global growth prospects on investor decisions,” said the BSP.

Non-residents’ net investments in equity capital (other than reinvestment of earnings) and reinvestment of earnings also declined by 54.4 percent and 10.3 percent to $74 million (from $163 million) and $76 million (from $85 million), respectively.

The BSP noted that, the bulk of the equity capital placements during the reference month originated from Japan, the United States, and Singapore in October 2023 as well as in the first 10 months of the year.

These were directed mostly to the manufacturing (54 percent), real estate (18 percent), and financial and insurance industries (15 percent) in October 2023.

In the first 10 months of 2023, investments in manufacturing amounted to P50 percent, 14 percent in real estate, and 12 percent in financial and insurance industries.

On a cumulative basis, net FDI inflows for the period January-October 2023 were lower by 17.5 percent at $6.5 billion compared with the $7.9 billion in January to October 2022.

The BSP statistics on FDI are compiled based on the Balance of Payments and International Investment Position Manual, 6th Edition.

FDI includes 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.

FDI can be in the form of equity capital, reinvestment of earnings, and borrowings.

The BSP’s FDI statistics are distinct from the investment data of other government sources as its FDI covers actual investment inflows.

In 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 (meaning equity capital placements less withdrawals), while the PSA’s foreign investment data do not account for equity withdrawals.