THE country’s foreign direct investments (FDIs) contracted 8.3 percent in the January-October 2022 period, according to data released by the Bangko Sentral ng Pilipinas (BSP).
Data showed net foreign direct investment declined to $7.6 billion in the January to October 2022 period from $8.3 billion in January to October 2021.
“FDI includes [a] investment by a non-resident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent, and [b] investment made by a non-resident subsidiary/associate in its resident direct investor. FDI can be in the form of equity capital, reinvestment of earnings, and borrowings,” BSP said.
Of this amount, net debt instruments accounted for more than half or $5.36 billion in the January to October 2022 period. It posted a 10.2-percent contraction from the $5.97 billion in the same period in 2021.
The rest or $2.27 billion is accounted for by equity and investment fund shares in the 10-month period of 2022. This also contracted 3.7 percent from the $2.36 billion posted in 2021.
Meanwhile, BSP data showed that October FDIs rose 6.3 percent to $923 million in October 2022 from the $868-million net inflows in October 2021.
“Despite the global economic headwinds, FDI net inflows rose on account of the increase in non-residents’ net investments in debt instruments and equity capital of their local affiliates,” BSP said.
By country source, equity capital placements emanated largely from Japan, the United States, and Singapore in October as well as in the January-October 2022 period.
The BSP said in October, these investments were channeled mainly to the electricity, gas, steam and air conditioning supply at 31 percent; manufacturing at 29 percent; and information and communication, 16 percent.
In the January to October 2022 period, the top industries that received these FDIs are manufacturing at 30 percent; real estate at 18 percent; and finance and insurance at 17 percent.
The BSP statistics on FDI are compiled based on the Balance of Payments and International Investment Position Manual, 6th Edition (BPM6).
The FDI statistics are distinct from the investment data of other government sources since BSP’s data covers actual investment inflows.
By contrast, the approved foreign investments data published by the Philippine Statistics Authority (PSA)—which are sourced from Investment Promotion Agencies (IPAs)—represent investment commitments, which may not necessarily be realized fully, in a given period.
The PSA data are not based on the 10-percent ownership criterion under BPM6. Moreover, the BSP’s FDI data are presented in net terms (i.e., equity capital placements less withdrawals), while the PSA’s foreign investment data do not account for equity withdrawals.