FDI in ows soar to 26-month high

The net inflow of foreign direct investments (FDI) picked up for a second straight month in February, surging to its highest level in more than two years, the Bangko Sentral ng Pilipinas (BSP) said.

Data released by the central bank showed net FDI inflows increased by 29.3 percent to $1.36 billion in February from $1.06 billion in the same month last year.

This was the highest in 26 months or since the $2.66 billion recorded in December 2021.

“This development was due to the 927.3 percent expansion in non-residents’ net investments in equity capital (other than reinvestment of earnings) to $764 million from $74 million in February 2023,” the BSP said.

Based on BSP data, equity placements stood at $857 million in February, more than seven times higher than the $74 million a year ago. Withdrawals more than doubled to $93 million from $38 million.

Equity infusions mostly came from the Netherlands (89 percent) and Japan (six percent). Around 91 percent of inflows were channeled into the financial and insurance industry, while five percent of investments were directed to manufacturing.

This was enough to offset the 41.5 percent decline in investments in debt instruments to $533 million from $912 million in February 2023.

These investments were mainly inter-company borrowing between foreign direct investors and their subsidiaries or affiliates in the Philippines.

Likewise, reinvestment of earnings went down by 3.8 percent to $66 million in February from $69 million a year ago.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the surge in FDI inflows was due to improved economic and financial markets performance in February.

Robust economic growth also drove more FDI into the country, he said.

For the first two months of the year, net FDI inflows jumped by 48.2 percent to $2.27 billion from $1.53 billion in the same period last year.