FDI records US$793 million net inflows in November 2022

Foreign direct investment (FDI) recorded US$793 million net inflows in November 2022, a decline of 43.6 percent from the US$1.4 billion net inflows in the same month in 2021.^1, 2

This resulted from the drop in non-residents’ net investments in debt instruments and reinvestment of earnings (Figure 1).^[1] Meanwhile, net placements of equity capital rose year-on-year for the third consecutive month.

By country source, equity capital placements came mostly from Japan, Singapore, and the United States. These were invested largely to the 1) manufacturing; 2) information and communication; and 3) real estate industries.

The year-to-date FDI net inflows likewise declined by 13.4 percent to US$8.4 billion from the US$9.7 billion recorded in the first eleven months of 2021 (Figure 2). By component, non-residents’ net investments in debt instrument and reinvestment of earnings declined while their net placements of equity capital increased during the period.

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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.

^[1] 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.