Net inflows of foreign direct investments rose 64.1 percent in May to $742 million from $452 million a year ago on investors’ sustained confidence in the Philippine economy, the Bangko Sentral ng Pilipinas said Wednesday.
The figure brought the FDI net inflows in the first five months to $4.2 billion, up 18.8 percent from $3.5 billion registered in the same period last year.
“The year-to-date growth was mainly on account of the increase in non-residents’ net investments in debt instruments, which muted the decline in net equity capital placements [other than reinvestment of earnings],” the BSP said in a statement.
It said the FDIs grew in May on strong non-residents’ net investments in debt instruments and equity capital of their local affiliates.
Data showed equity capital placements by country source came mainly from Japan, the United States, Singapore and the Netherlands. These were invested mostly in manufacturing, real estate, information and communication and transportation and storage industries.
Net inflows of FDIs reached a record $10.5 billion in 2021, breaching the previous high of $10.3 billion in 2017. The 2021 level represented a 54.2-percent increase from the $6.8-billion net inflows in 2020. It also surpassed the $8-billion target for the year set by the BSP.
The BSP expects FDI net inflows to reach $11 billion this year, exceeding last year’s $10.5 billion despite the challenging global environment marked by high inflation and supply disruption. It also expects FDI flows to reach $11.8 billion in 2023, supported by several legislative reforms.
These reforms include the amendments to the Retail Trade Act, the Foreign Investment Act and the Public Service Act which opened more industries to foreign investors. The amended Public Services Act allows greater foreign ownership in telecommunication, airlines and railways.
Data on FDIs are compiled based on the Balance of Payments and International Investment Position Manual, 6th Edition of the BSP. FDIs include investment by a non-resident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent, and investment made by a non-resident subsidiary/associate in its resident direct investor.
FDIs can be in the form of equity capital, reinvestment of earnings and borrowings.
The BSP said the FDI statistics are distinct from the investment data of other government sources. FDIs cover actual investment inflows, while the approved foreign investments data published by the Philippine Statistics Authority, which are sourced from investment promotion agencies, represent investment commitments, which may not necessarily be realized fully, in a given period.
The PSA data are also not based on the 10-percent ownership criterion under BPM6.