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GLOBAL uncertainties pushed foreign investors away from Philippine shores as Foreign Direct Investment (FDI) net inflows contracted in 2023, according to the Bangko Sentral ng Pilipinas (BSP).
Based on the latest data, full-year 2023 FDI net inflows declined 6.6 percent to $8.9 billion from $9.5-billion net inflows recorded in 2022.
In December 2023, FDIs, however, increased 29.9 percent to $826 million from the $636 million recorded in December 2022.
“Notwithstanding the country’s sound macroeconomic fundamentals, concerns over subdued global economic growth and geopolitical risks continued to weigh on investors’ investment plans,” BSP said.
The data showed net debt instruments increased 1.3 percent to $6.334 billion in 2023. In December 2023, it nearly doubled or posted a growth of 86.2 percent to $527 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 data showed equity and investment fund shares contracted 22 percent to $2.53 billion in 2023 and 15.3 percent to $299 million in December 2023.
The data showed net equity other than reinvestment of earnings also contracted in double-digits at 34 percent to $1.292 billion in 2023 and 21.7 percent to $208 million in December 2023.
Equity placements contracted 16.7 percent to $1.838 billion in 2023 and 20.9 percent to $224 million in December 2023.
“Bulk of the equity capital placements during the reference month came from Japan, with investments directed mostly to the manufacturing industry,” BSP said.
The data showed equity withdrawals, however, more than doubled or posted a growth of 119.8 percent to $547 million in 2023. Nonetheless, it contracted 8.1 percent to $16 million in December 2023.
BSP said reinvestment of earnings improved slightly by 4.1 percent to $91 million from $87 million. But in 2023, it contracted 3.6 percent to $1.239 billion.
FDI includes investments by a nonresident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent.
It also includes investment made by a nonresident subsidiary/associate in its resident direct investor. FDI can be in the form of equity capital, reinvestment of earnings, and borrowings.
Image credits: Arden Paolo Alberto | Dreamstime.com
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