10-month FDIs jump to $8.14 billion

MANILA, Philippines — The net inflow of foreign direct investments (FDIs) almost doubled in October last year, bringing the total amount of actual investments that flowed into the country to $8.14 billion from January to October last year, exceeding the revised full-year 2021 target of $8 billion.

BSP Governor Benjamin Diokno said the FDI inflow almost doubled to a two-month high of $855 million in October last year from $430 million in the same month in 2020.

During the month, non-residents’ net investments in debt instruments jumped by 78.5 percent to $637 million from $357 million, as multinational companies continued to inject more money into their affiliates in the Philippines, while reinvestment of earnings inched up by 7.1 percent to $77 million from $72 million.

Diokno said equity placements coming from Japan, Singapore and the US soared by 80 percent to $154 million from $86 million, while outflows plunged by 84.1 percent to $13 million from $85 million.

For the 10-month period, Diokno said the figure was higher than the $5.5 billion net inflow recorded in the same period in 2020.

Last month, the central bank’s Monetary Board decided to raise the FDI target for 2021 to $8 billion versus the lowered $7 billion in September, and for 2022 to $8.5 billion instead of $7.5 billion.

Diokno said cumulative FDI net inflows rose on the back of the 78.6 percent jump in non-residents’ net investments in debt instruments to $5.94 billion during the 10-month period of the previous year’s $3.32 billion.

Likewise, the BSP chief said reinvestment of earnings grew by 11.9 percent to $942 million from $842 million.

On the other hand, equity placements coming mainly from Singapore, Japan, the US and the Netherlands, which were channeled to manufacturing; electricity, gas, steam and air-conditioning; financial and insurance as well as real estate, slipped by 3.6 percent to $1.61 billion from $1.67 billion.

Meanwhile, equity withdrawals inched up by 2.3 percent to $351 million from $343 million.

Economic managers are looking at a full recovery from the impact of the COVID-19 pandemic, with a gross domestic product (GDP) growth of seven to nine percent this year from five to 5.5 percent last year.

The Philippines’ GDP expansion averaged 4.9 percent in the first nine months of last year after booking back-to-back GDP growth of 12 percent in the second quarter and 7.1 percent in the third quarter.

The country slipped into recession as the GDP shrank by 9.6 percent due to strict lockdown measures. The pandemic-induced recession stretched five quarters or until the first quarter of 2021, with a contraction of 3.9 percent.

The BSP’s pandemic response measures unleashed P2.3 trillion into the financial system to cushion the impact of the global health crisis on the economy, and at the same time boost market confidence.