February 2024 FDI inflows surge to US$1.4 billion

Foreign direct investment (FDI) net inflows in the Philippines continued to exhibit robust growth in February 2024, recording a 29.3 percent year-on-year increase to reach $1.4 billion, up from $1.1 billion in February 2023.

This notable rise was primarily fueled by a staggering 927.3 percent surge in nonresidents’ net investments in equity capital, which soared to $764 million from just $74 million in the previous year.

However, this growth was partially offset by a 41.5 percent decline in net investments in debt instruments, which fell to $533 million from $912 million, and a slight 3.8 percent drop in reinvestment of earnings to $66 million from $69 million.

The majority of the equity capital placements originated from the Netherlands, focusing largely on the financial and insurance sectors.

These positive trends contributed to a cumulative FDI net inflow of $2.3 billion for the first two months of 2024, marking a significant 48.2 percent increase from the $1.5 billion recorded during the same period in 2023.

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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 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 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 nonresident subsidiaries/associates in their resident direct investors, i.e., reverse investment.