FDI inflow rebounds by 46% in February

MANILA, Philippines — The net inflow of foreign direct investments (FDI) bounced back with a 46.3 percent rise in February after contracting by 16 percent in January, as the government was able to contain the resurgence of COVID cases during the review period, according to the Bangko Sentral ng Pilipinas (BSP).

Data released by the BSP Tuesday evening showed the net inflow of FDIs reached $893 million in February,  $282 million higher than the $611 million recorded in February last year.

As a result, the net FDI inflow from January to February went up by eight percent to $1.71 billion from $1.58 billion in the same period last year as net investments in debt instruments grew by 29.3 percent to $1.36 billion from $1.05 billion.

Equity capital placements from Kuwait, Japan, and the US channeled mainly to the financial and insurance, manufacturing, as well as real estate industries went up by 26.5 percent to $116 million from $92 million.

On the other hand, withdrawals plunged by 72.4 percent to $19 million from $69 million.

Likewise, reinvestment of earnings slipped by one percent to $74 million in February from $75 million in the same month last year.

The BSP reported a 40.8 percent jump in non-residents’ net investments in debt instruments to $722 million in February from $513 million a year ago as multinational companies continued to inject more money into their affiliates in the Philippines to finance their operational requirements.

“The growth in FDI reflected mainly the continued infusion of funds by non-resident direct investors to their local subsidiaries,” the BSP said.

Capital infusion from Japan, the US, and Kuwait that went to manufacturing, financial and insurance, as well as real estate industries fell by 49.4 percent to $234 million in February from $462 million a year ago, while withdrawals plunged by 62 percent to $30 million from $79 million.

Likewise, reinvestment of earnings slipped by 1.2 percent to $152 million from $153 million.

After jumping by 54.2 percent to a record high of $10.5 billion last year from $6.8 billion in 2020, the BSP now expects a higher FDI net inflow to $11 billion this year and $11.8 billion next year.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said that the net inflow of FDIs may improve further in the coming months as the National Capital Region (NCR) and nearby provinces shifted to Alert Level 1 starting March after being upgraded to Alert Level 1 in January.

“Net FDIs nevertheless is still among the highest since the pandemic started and still near record highs on a monthly basis, thereby still a bright spot for the economy, as these would still lead to more business activities, as well as leading the creation of more jobs as the economy reopened further toward greater normalcy,” Ricafort said.

He said FDIs remain one of the bright spots and one of the major pillars of the country’s economic recovery program from COVID.