THE Philippines failed to attract more foreign investments as the latest data showed Foreign Direct Investment (FDI) inflows posted double-digit contractions in October 2023, according to the Bangko Sentral ng Pilipinas (BSP).
In a statement, BSP said FDI inflows declined 29.6 percent to $655 million in October 2023 and by 17.5 percent to $6.5 billion in the January to October 2023 period.
“While FDI continued to record net inflows, the recent decline in levels reflects the adverse impact of persistent inflationary pressures and slowing global growth prospects on investor decisions,” BSP said.
The October 2023 FDI inflow contraction of 29.6 percent marked the third consecutive month of decline.
Data showed that FDI inflows in 2023 only turned positive in February with a growth of 11.2 percent and July at 34.4 percent.
BSP attributed the decline in FDI inflows in October 2023 to the 26.1-percent decrease in net investments in debt instruments to $504 million from $682 million.
“Net investments in debt instruments consist mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines,” BSP explained.
“The remaining portion of net investments in debt instruments are investments made by nonresident subsidiaries/associates in their resident direct investors, i.e., reverse investment,” it added.
BSP also said Nonresidents’ net investments in equity capital other than reinvestment of earnings declined by 54.4 percent to $74 million from $163 million.
Data from the Philippine central bank also showed reinvestment of earnings also contracted 10.3 percent to $76 million from $85 million.
“The bulk of the equity capital placements during the reference month originated from Japan, the United States, and Singapore,” BSP said. “These were directed mostly to the manufacturing; real estate; and financial and insurance industries.”
FDI includes investment by a nonresident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent and an investment made by a nonresident subsidiary/associate in its resident direct investor.
BSP said FDI can also be in the form of equity capital, reinvestment of earnings, and borrowings.
The BSP FDI statistics are distinct from the investment data of other government sources. BSP FDI covers actual investment inflows.
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