FDI Registers US$368 Million Net Inflows in September 2024

Foreign direct investment (FDI) net inflows registered US$368 million in September 2024, lower by 36.2 percent than the US$577 million net inflows posted in September 2023 (Figure 1).^1,2

he downturn in FDI net inflows in September 2024 was due largely to the 32.8 percent decline in nonresidents’ net investments in debt instruments to US$277 million from US$413 million.³ Similarly, nonresidents’ net investments in equity capital (other than reinvestment of earnings) fell by 91.2 percent to US$7 million from US$83 million. This was mitigated slightly by the 3.6 percent growth in nonresidents’ reinvestment of earnings to US$84 million from US$81 million in September 2023. Bulk of the equity capital placements in September 2024 were sourced from Japan, the United States, and Singapore.

Said investments were channeled mainly to the (1) manufacturing, (2) real estate, (3) information and communication, and (4) wholesale and retail trade industries.

For the first nine months of 2024, FDI net inflows settled at US$6.7 billion, a growth of 3.8 percent from the US$6.4 billion net inflows recorded in January-September 2023 (Figure 2).

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¹ 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 nonresident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent, and (b) 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.

² BSP FDI statistics are different 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.  Furthermore, the said PSA data are not based on the 10-percent foreign 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 nonresident subsidiaries/associates in their resident direct investors, i.e., reverse investment.