January to April FDI up 18.7% to $3.5 billion despite risks

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DESPITE global uncertainties, investors remained confident as the country’s foreign direct investments (FDIs) reached US$3.525 billion from January to April this year, according to Bangko Sentral ng Pilipinas (BSP).

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Latest data from the BSP showed the cumulative FDI net inflows for the four-month period rose by 18.7 percent to US$3.525 billion from US$2.971 billion in the same period a year ago.

For the month of April, FDI net inflows decreased to US$556 million, down by 36.9 percent from the US$881 million net inflows recorded in the same month in 2023.

The BSP credited the decline in FDI net inflows in April due to the nonresidents’ net investments in debt instruments, lower by 38.8 percent to US$407 million from US$665 million in April 2023.

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Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said FDIs in April are the slowest in 10 months or since June 2023, at the height of risk aversion brought about by geopolitical risks such as the direct attacks between Iran and Israel.

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“Though still wait-and-see if net FDI inflows would revert back to prepandemic levels in the coming months; as a pick up/improvement in FDI data later in 2024 could be supported by the possible local policy rate cut of -0.25 as early as August 2024,” Ricafort added.

Nonresidents’ net investments in equity capital (other than reinvestment of earnings) declined by 48.1 percent to US$68 million from US$132 million in 2023.

However, it posted a growth of 149.1 percent to US$978 million in 2024 from $393 million in 2023. In April 2024, placements went down by 47 percent to US$84 million from US$158 million in the same month last year.

Placements increased by 126.8 percent from January to April 2024 to US$1.213 billion from US$535 million in 2023.

BSP data also showed withdrawals reached decreased by 41.7 percent in April 2024 to US$16 million from US$27 million in the same month a year ago.

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Withdrawals in the four-month period grew by 65.2 percent to US$235 million from US$142 million in the same period in 2023.

Meanwhile, BSP said reinvestment of earnings decreased by 4.2 percent to US$81 million in April 2024 from $84 million in April 2023 and posted a flat decline of 0.1 percent in the first four months of 2024.

The BSP said equity capital placements in April 2024 were sourced largely from Japan, which accounted for 47 percent of total FDIs during the month.

This was followed by the United States with 21 percent of the total FDIs in April and Malaysia, which accounted for 11 percent of investments during the period, and Singapore with 9 percent.

In the four-month period, the data showed that 63 percent of the total FDIs for the quarter came from the Netherlands, 22 percent came from Japan and 6 percent from the United States.

“This improvement reflects investor confidence in the Philippine economy’s resilience amid global uncertainties,” the BSP said.

The top industries where FDIs were invested in for April 2024 were manufacturing at 36 percent of the total, followed by real estate, 26 percent; others, at 14 percent; wholesale and retail trade at 13 percent; and financial and insurance, 10 percent.

In the first four months of the year, majority, or 67 percent, of FDIs were poured into financial and insurance followed by manufacturing at 18 percent; others, 8 percent; and real estate, 7 percent.





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