Foreign direct investment inflows fell to 10-month low in April 2024

Inflows of foreign direct investments (FDI) to the Philippines fell to a 10-month low in April amid global investors' uncertainties arising from geopolitical developments, data released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday showed.

The BSP said FDI into the country yielded net inflows of $556 million in April, down 36.9% from $881 million net inflows seen in April 2023.

The central bank defines FDI as an investment by a foreign direct investor in a local enterprise, whose equity capital in the latter is at least 10% or an investment made by a foreign subsidiary in its resident direct investor.

FDI can be in the form of equity capital, reinvestment of earnings, and borrowings.

The BSP's FDI statistics are distinct from the investment data of other government sources as this covers actual investment inflows, as compared with approved foreign investments data published by the Philippine Statistics Authority (PSA) sourced from Investment Promotion Agencies representing investment commitments or pledges which may not necessarily be realized fully, in a given period.

In an emailed commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the decrease in FDI in April could be brought about by "the height of risk aversion largely brought about by the geopolitical risks in view of the unprecedented direct attacks between Iran and Israel from April 1-20, 2024."

Broken down, decline in FDI in April was amid the decrease in foreigners' net investments in debt instruments by 38.8% to $407 million from $665 million in April 2023.

Foreigners' net investments in equity capital and their reinvestment of earnings also declined by 48.1% to $68 million from $132 million and by 4.2% to $81 million from $84 million, respectively.

The BSP said equity capital placements in April emanated largely from Japan, the United States, Malaysia, and Singapore.

The central bank said equity investments were channeled primarily to manufacturing, real estate, wholesale and retail trade, and financial and insurance industries.

Despite the decline seen in April, year-to-date or the January to April FDI stood at net inflows of $3.5 billion, up from $3 billion in the same period last year.

"This improvement reflects investor confidence in the Philippine economy's resilience amid global uncertainties," the BSP said.

Ricafort, for his part, said increased year-to-date FDI inflows "could have also partly been brought about by some realized investment commitments made for more than a year already during the various foreign trips of the administration."

Citing data from the Department of Trade and Industry (DTI), Malacañang reported last February that 46 projects worth $14.2 billion in foreign investments have been actualized from the overseas trips of President Ferdinand "Bongbong" Marcos Jr. in 16 months. — VDV, GMA Integrated News