BSP: FDI grow 41.5% in Jan on more upbeat mood

FOREIGN investors mirrored the optimistic sentiment of Filipino firms in the first month of the year, as long-term investments made by global players grew in January 2021, the Bangko Sentral ng Pilipinas (BSP) reported.

Foreign direct investments (FDI) net inflows reached $961 million in January this year, up 41.5 percent from the $679 million seen in January last year.

FDI are investments made by foreign players to the Philippines with hopes of long-term return.

Since these are in the country for a longer term compared to their short-term counterpart, the foreign portfolio investments (FPI), FDI usually create jobs for Filipinos and have a multiplier effect on the economy.

Broken down, the increase in FDI during January was supported mainly by the 116-percent expansion in foreign net investment in debt instruments to $535 million from $248 million in the same month last year.

There were also significantly less equity withdrawals in January this year, from $24 million in 2020 to $10 million in 2021.

Equity capital placements during the period emanated largely from Singapore, Japan, and the Netherlands and were channeled mostly to financial and insurance, manufacturing, and professional, scientific, and technical industries.

Meanwhile, reinvestment of earnings declined by 9.2 percent to $74 million from $82 million in January 2020.

The BSP attributed the positive foreign sentiment towards the Philippines to the gradual reopening of the economy early in 2021.

“This development reflects the investors’ optimism at the start of the year due in turn to the gradual reopening of the economy under the ‘new normal’ condition, easing of lockdown measures, and positive news about the rollout of Covid-19 vaccines,” the BSP said.

The optimism of foreign investors parallels the more upbeat outlook of local businesses.

Earlier this month, the BSP reported results of the quarterly survey, indicating that local businesses are growing more optimistic about economic opportunities in the country, as more and more firms adapt to the “new normal.”

In particular, the overall confidence index (CI) for the first quarter of the year rose to 17.4 percent from 10.6 percent in the fourth quarter of 2020. This is the second consecutive quarter that confidence in the business community grew based on the survey.