FDI net inflows hit record high $10.5B in ’21

Net inflows of foreign direct investments (FDI) at the end of 2021 reached an all-time high of $10.5 billion, according to the Bangko Sentral ng Pilipinas (BSP).

The full-year result surpassed the BSP’s initial expectation that net FDI inflows would reach P7 billion. It also breached the previous record of $10.3 billion set in 2017.

Also, the end-2021 figure was 54 percent higher than the $6.8 billion recorded in 2020.

BSP data also showed that the net inflow of long-term capital grew year-on-year for the seventh month straight in December, surging 59 percent to $1.1 billion in 2021 from $671 million in the same month of 2020.

“The growth in FDI reflected continued positive foreign investor sentiment on the country amid expectations of a rebound in domestic economic activity and declining COVID-19 reported cases, as well as the strengthening of the global economy,” the BSP said.

The central bank said 2021 net inflows were buoyed further by a 84-percent growth in nonresidents’ net investments in debt instruments. This component of FDI climbed to $7.5 billion from $4.2 billion.

Also, nonresidents’ net investments in equity capital—other than reinvestment of earnings—jumped by 35 percent to $1.3 billion from $944 million.

Equity capital

At the same time, reinvestment of earnings grew by 50 percent to $96 million from $64 million.

Most of the equity capital placements in 2021 came from Singapore, Japan and the United States. These were invested mostly in the industries of manufacturing; electricity, gas, steam and air-conditioning; financial and insurance; and real estate.

In December alone, FDI net inflows increased thanks to a 60-percent year-on-year expansion in nonresidents’ net investments in debt instruments—$634 million from $396 million.

At the same time, nonresidents’ net investments in equity capital—other than reinvestment of earnings—jumped by 69 percent to $336 million from $211 million in December 2020.

This was driven by a 61-percent surge in equity capital placements—$371 million from $231 million, which offset a 75-percent surge in equity capital withdrawals—$35 million from $20 million.

Last December, equity capital placements mainly came from Singapore, Japan and the Netherlands. These were channeled primarily to the industries of electricity, gas, steam and air-conditioning; manufacturing; and financial and insurance industries.