Net FDI inflow declined by marginal 0.3% in August, says BSP

MANILA  -The net inflow of foreign direct investments (FDI) declined by a slight 0.3 percent in August this year to $789 million from $792 million in the same month last year, according to the Bangko Sentral ng Pilipinas (BSP).

The readout for August meant a reversal from a 35.7-percent surge recorded a month earlier in July, as the billions of dollars of pledges that the Marcos administration secured through trips abroad remain unrealized. However, it was still a significant improvement from the 22.6-percent drop seen a year ago.

The BSP said the marginal decline in FDI net inflows reflected the 7.8-percent contraction in nonresidents’ net investments in debt instruments, which settled at $537 million from $582 million in August 2022.

This decline was tempered partly by a 21.4-percent rise in nonresident’s reinvestment of earnings, which reached $217 million from $179 million.

Equity capital

There was also a 13.3-percent jump in nonresidents’ net investments in equity capital other than reinvestment of earnings, which rang up at $36 million from $31 million.

Most of the inflows that went into equity capital placements again came from Japan, the United States, and Singapore.

These were invested into companies that were engaged in manufacturing, wholesale and retail trade, and information and communication.

The results for August brought the January-August tally to $5.45 billion, a jump of 12.9 percent from $6.26 billion in the same period last year.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said net inflows in August were the highest in four months or since $877 million last April.

“Investment commitments, especially if realized or monetized, from the various foreign trips by the administration could also help generate more FDI in the coming months,” Ricafort said.

He noted that the latest investment commitments include $1.7 billion from the United States; $13 billion from Japan; and $24.2 billion from China.

Foreign trips

Previous to foreign trips made earlier this year, the Marcos administration also received $2.2 billion in pledges during international gatherings held in Belgium; $4.6 billion in Thailand; $8.4 billion in Indonesia; $6.5 billion in Singapore, and $3.9 billion in an earlier visit to the United States.

“These could lead to more US dollar inflows, especially in the form of FDI, at the very least, although it’s still wait-and-see for the actual investments to be made into the country,” he added.