Philippines sees surge in foreign investment inflows

By Francis Allan L. Angelo

February 2024 has marked a significant turnaround in foreign investments for the Philippines, with the Bangko Sentral ng Pilipinas (BSP) reporting net inflows amounting to US$689 million.

The figure reflects the excess of the month’s US$1.5 billion gross inflows over the US$859 million gross outflows. The positive shift is stark against the backdrop of the previous month’s US$76 million net outflows.

The registered investments in February, exceeding January’s figures by 25.3 percent, saw a majority stake in Peso-denominated Government Securities (GS), capturing 61.4 percent of the total at US$951 million.

The balance was invested in Philippine Stock Exchange (PSE)-listed securities, focusing on sectors such as banking, transportation services, holding firms, property, and food, beverage, and tobacco.

The bulk of these investments originated from prominent global financial hubs including the United Kingdom, Singapore, the United States, Luxembourg, and Hong Kong, collectively contributing to 89.1 percent of the total investments.

In terms of outflows, the US remained the prime destination, accounting for 56.4 percent or US$485 million of the outward remittances, which were 34.5 percent less compared to January’s figures.

Reflecting on a year-on-year comparison, there was a substantial 127.7 percent increase in registered investments from February 2023’s US$680 million, accompanied by a 30.1 percent decline in gross outflows from the same period the previous year.

This growth in net inflows contrasts sharply with the net outflows recorded in February of the preceding year, which stood at US$549 million.

Cumulatively, from January 1 to February 29, 2024, the Philippines has seen net inflows of US$613 million, an encouraging reversal from the US$258 million net outflows documented in the comparable timeframe of 2023.

The process of registering these inflows is optional and governed by the BSP’s rules on foreign exchange transactions. It is necessitated only when investors or their representatives require foreign exchange from authorized banks or their affiliates for capital repatriation or earnings remittance.

However, without this registration, investors can still repatriate and remit, though they would need to source their foreign exchange outside the formal banking system.

The investment instruments in question encompass a range of inward foreign investments, including PSE-listed securities, peso-denominated government and corporate debt, and various collective investment schemes such as unit investment trust funds and exchange-traded funds.

The BSP’s report, along with detailed statistical tables, can be accessed via the central bank’s official channels.