FDIs recover 46.3% in February raising 2-month level to $1.71 B

Foreign direct investments (FDIs) in February rose by 46.3 percent year-on-year to $893 million net inflows from $611 million on account of non-residents’ net investments in debt instruments, said the Bangko Sentral ng Pilipinas (BSP).

Based on BSP data on a cumulative basis, net FDI reached $1.71 billion in the first two months of 2022, up by eight percent from $1.58 billion in the same period in 2021. The BSP said the growth in FDI was due to the infusion of funds by nonresident direct investors to their local subsidiaries.

“Specifically, the expansion in the January-February 2022 net inflows was due mainly to the 29.3 percent growth in nonresidents’ net investments in debt instruments to $1.4 billion from $1 billion in the comparable period last year,” said the BSP on Wednesday, May 11. Net investments in debt instruments, as defined by the BSP, consist mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines.

The BSP said reinvestment of earnings for the first two months was “broadly stable” at $152 million, down by 1.2 percent year-on-year.

Non-residents’ net investments in equity capital other than reinvestment of earnings also fell by 46.7 percent to $204 million from $383 million. “This resulted as equity capital placements declined by 49.4 percent,” noted the BSP. Equity capital placements dropped to $234 million as of end-February which “more than offset the 62.1 percent drop in withdrawals to $30 million (from $79 million),” it added.

Equity capital placements came from investors from Japan, the US, and Kuwait, and invested in these sectors: manufacturing; financial and insurance; and real estate industries.

For the month of February only, the BSP said the 46.3 percent increase was backed by the 40.8 percent year-on-year growth in non-residents’ net investments in debt instruments of local affiliates of $722 million.

Non-residents’ net investments in equity capital other than reinvestment of earnings also grew by 320.1 percent to $97 million from $23 million in 2021.

Equity capital placements rose by 26.5 percent to $116 million while equity capital withdrawals contracted by 72.4 percent to $19 million, said the BSP.

Investors from Kuwait, Japan, and the US contributed to the increase in equity capital. As for the reinvestment of earnings, this went down slightly to $74 million in February, down by one percent.