The Philippines saw “broadly stable” flows of foreign direct investments (FDI) last year and the outlook seems “encouraging” in the near-term, not just for the country but also for the entire Asean region, Bank of America (BofA) said.
In a report, Kai Wei Ang, Asia and Asean economist at BofA, said the Philippines and Thailand were among the economies in the region that saw stable year-on-year FDI flows in 2023 while Indonesia, Malaysia, Singapore and Vietnam posted a “broad uptrend” against prepandemic level.
The combined FDI flows of the six Asean economies edged up to $219 billion in 2023 based on data compiled by BofA, from $218 billion in 2022.
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But excluding Singapore, which global investors typically use as a gateway for their investments in the region, BofA said total FDI in the remaining five Asean economies moderated to $60 billion in 2023 from the $76-billion average flows seen between 2021 and 2022.
Ang nevertheless said the near-term outlook seems encouraging for the region. In the Philippines alone, the government’s push to energize the entire archipelago has caught the interest of investors.
“Approvals in recent quarters have picked up in the case of the Philippines, led by approvals for power projects,” the BofA economist said.
Unlike the so-called “hot money” that leaves markets at the first sign of trouble, FDIs are firmer capital inflows that generate jobs for people. That said, the government wants existing FDIs to stay, while attracting new ones.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed FDIs recorded a net inflow of $556 million in April, plummeting by 36.9 percent compared with a year ago.
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But despite the decline, the four-month FDI tally went up by 18.7 percent year-on-year to $3.5 billion, albeit still far from the BSP’s forecast of $9.5-billion FDI net inflow by the end of 2024. Figures from the BSP showed FDIs yielded a net inflow of $8.9 billion in 2023.
For next year, the central bank raised its FDI forecast to a $10.5-billion net inflow from the previous projection of $9 billion.
The BSP said foreign investment flows were expected to “sustain gains, albeit modest,” in 2025 as investors are anticipated to “act with caution amid possible policy shifts as new political leaders in more than 50 economies are seated by next year.”