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April 21, 2024

Pandemic pushes FDI 16 percent lower in January

Foreign direct investments (FDIs), which stay injected in local enterprises for the long haul, flowed inward on net basis in January this year, totaling $819 million.

This was lower by 16 percent than year-ago net inflows reaching $975 million, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

The decline in FDI net inflows reflected the 68.2 percent contraction in equity capital placements to $118 million from $370 million in the same month last year.

This may be due largely to investor concerns following the resurgence of cases of the highly transmissible Omicron COVID-19 variant in the country and the re-imposition of stricter quarantine measures in early January 2022.

According to the BSP, equity capital placements came mostly from Japan, the United States, the Netherlands, and Malaysia. Capital infusions were channeled for the most part to the manufacturing, financial and insurance, and real estate industries.

Reinvestment of earnings, representing profits quickly plowed back into the business instead of repatriated, was little changed at $78 million from $79 million a year ago.

Non-residents’ net investments in debt instruments increased by 18.3 percent to $634 million from $536 million in January last year as inflows were infused to local affiliates to finance their operational requirements.

Regulators prefer FDIs over portfolio investments more known as speculative or “hot” money placements that are quickly withdrawn on the merest hint of local trouble or promise of higher return elsewhere.