FDI posts US$448 million net inflows in January 2023

Foreign direct investment (FDI) posted US$448 million net inflows in January 2023, a decline of 45.7 percent from the US$824 million net inflows in the same period last year.^1, 2 This resulted from the decrease in non-residents’ net investments in debt instruments and equity capital (Figure 1).³

Meanwhile, non-residents’ reinvestment of earnings increased slightly. FDI net inflows declined during the month amid global economic uncertainties and high inflation, which continued to weigh on investor decisions.

By country source, equity capital placements came mostly from Japan, Singapore, and the United States. These were invested largely to the manufacturing, financial and insurance, and real estate industries.

---

¹ The BSP statistics on FDI are compiled based on the Balance of Payments and International Investment Position Manual, 6th Edition (BPM6).  FDI includes (a) investment by a non-resident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent, and (b) 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.

² The BSP FDI statistics are distinct from the investment data of other government sources. BSP FDI covers actual investment inflows. By 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 (i.e., equity capital placements less withdrawals), while the PSA’s foreign investment data do not account for equity withdrawals.

³ Net investments in debt instruments consist mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines. The remaining portion of net investments in debt instruments are investments made by non-resident subsidiaries/associates in their resident direct investors, i.e., reverse investment.