Bangko Sentral ng Pilipinas

Foreign direct investment sinks 45.7% in January 2023

Lance Spencer Yu

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Foreign direct investment sinks 45.7% in January 2023
Lending between foreign direct investors and their local counterparts slowed, causing the fall in FDI

MANILA, Philippines – Philippine foreign direct investment (FDI) reached only $448 million in net inflows in January 2023, a drop of 45.7% from the net inflows recorded in the same period in 2023, which hit $824 million.

According to the Bangko Sentral ng Pilipinas (BSP), the slowdown in FDI was mostly due to fewer net investments in debt instruments and equity capital, which fell by 56.6% and 13.1%, respectively.

Reinvestment of earnings increased by 4.1%, but this wasn’t enough to offset the decrease from other sources.

“FDI net inflows declined during the month amid global economic uncertainties and high inflation, which continued to weigh on investor decisions,” the BSP said in a press release on Tuesday, April 11.

Inflation in January reached 8.7%, the highest level recorded since November 2008. 

Here is the trend on FDIs from January 2020 to January 2023 based on data from the BSP:

The BSP defines FDI as “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.” The investments can be in the form of equity capital, reinvestment of earnings, and debt instruments.

Net investments in debt instruments, which usually make up the bulk of FDI, includes intercompany borrowing and lending between foreign direct investors and their subsidiaries or affiliates in the Philippines.

For the period covered, gross placements of equity capital came mostly from Japan, Singapore, and the US.

The top industries receiving these investments were manufacturing at 48%, finance and insurance at 27%, and real estate at 13%. The remaining 11% were invested in other industries. –

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Lance Spencer Yu

Lance Spencer Yu is a multimedia reporter who covers the transportation, tourism, infrastructure, finance, agriculture, and corporate sectors, as well as macroeconomic issues.