PHL sees reduced net outflows in foreign investments for January 2024

By Francis Allan L. Angelo

The Bangko Sentral ng Pilipinas (BSP) reported a decrease in net outflows of foreign investments transactions, through authorized agent banks (AABs)*, in January 2024, marking a positive shift in investment trends at the start of the year.

The country witnessed net outflows amounting to US$76 million, a substantial improvement from the US$205 million net outflows recorded in December 2023.

The total gross outflows for January reached US$1.3 billion, contrasting with the gross inflows of US$1.2 billion for the month.

However, despite the outflows, there was a significant rise in registered investments, which were up by US$170 million, or 15.9 percent, compared to December 2023, totaling US$1.2 billion.

A closer look at the investment landscape revealed that 62.7 percent of registered investments were placed in PSE-listed securities, including banks, holding firms, property, transportation services, and food, beverage, and tobacco sectors, accounting for US$775 million.

On the other hand, about 37.3 percent were invested in Peso government securities (US$460 million), with less than one percent in other instruments.

The majority of the investments stemmed from key global players, with the United Kingdom, United States, Singapore, Luxembourg, and Hong Kong leading the contributions.

These countries accounted for an impressive 85.5 percent of the total registered investments.

January 2024’s gross outflows saw a slight increase of 3.2 percent from the previous month, with the United States being the primary destination for these outflows, receiving 45.8 percent of the total.

Year-on-year comparisons paint an even more optimistic picture. Registered investments for January 2024 outpaced those from January 2023 by 23.1 percent, although it’s notable that gross outflows also climbed by 84.0 percent compared to the previous year.

This activity reflects a turnaround from the same period last year, which saw net inflows of US$291 million, highlighting the dynamic nature of foreign investment flows.

The BSP clarified that registration of inward foreign investments with AABs is optional under current foreign exchange transaction rules.

It’s only necessary if the investor or their representative intends to purchase foreign exchange through the banking system for repatriation purposes.

Without such registration, foreign investors may still repatriate capital and remit investment earnings, but they would need to source the foreign exchange outside the local banking system.

*These investments refer to the following inward foreign investments registered with AABs: PSE-listed securities; Peso-denominated government securities; Peso time deposits with banks with minimum tenor of 90 days; other Peso debt instruments; unit investment trust funds; and other instruments such as Exchange Traded Funds and Philippine Depositary Receipts.