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Keisha Ta-Asan - The Philippine Star
February 11, 2025 | 12:00am
BSP data showed that the net inflow of FDI retreated by 19.8 percent to $901 million in November last year from $1.12 billion in the same month a year ago.
MANILA, Philippines — Uncertainties over US trade policies and local political tensions continue to take their toll on the country as the net inflow of foreign direct investments slipped to a two-month low in November last year, according to the Bangko Sentral ng Pilipinas.
BSP data showed that the net inflow of FDI retreated by 19.8 percent to $901 million in November last year from $1.12 billion in the same month a year ago.
It marked the lowest level since the $368 million inflows in September last year. On a monthly basis, FDI inflow declined by 11.8 percent from $1.02 billion in October 2024.
“The latest year-on-year and month-on-month decline in the latest FDI data in November 2024 could be attributed to uncertainties on possible protectionist measures by US President Trump,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said.
Ricafort said that Trump has been encouraging more investments and jobs in the US rather than in other countries, which could reduce FDI globally.
“Some local political noises also partly weighed on the latest FDI data,” Ricafort said.
“The series of typhoons and floods that caused economic disruptions in some areas of the country also partly disrupted some FDIs into the country,” he said.
According to the BSP, the decline in FDI net inflow in November last year was due to the contraction in nonresidents’ investments in debt instruments.
Investments in debt instruments, consisting mainly of intercompany borrowing between foreign direct investors and their subsidiaries or affiliates in the Philippines, fell by 17.9 percent to $791 million in November last year from $964 million in the same month in 2023.
Likewise, nonresident’s investments in equity capital plunged by 58.9 percent to $35 million in November last year from $85 million in the comparable year-ago period.
Equity placements went down by 37.8 percent to $71 million from $115 million. These funds, which came mainly from Japan, the US and Singapore, were channeled to the manufacturing, real estate, financial and insurance as well as administrative and support service industries.
Withdrawals jumped by 24.3 percent to $36 million in November last year from $29 million a year ago.
Despite the decline in November, the total FDI level inched up by 4.4 percent to $8.58 billion in the January to November period from $8.22 billion in the same period a year prior.
This is 95.6 percent of the $9 billion total expected FDI inflow for 2024. FDI can be in the form of equity capital, reinvestment of earnings and borrowings.
During the 11-month period, investments in debt instruments slid by 0.1 percent to $5.98 billion from $5.99 billion.
Capital inflows mainly from Japan, the United Kingdom, United States and Singapore rose by 23 percent to $1.98 billion in the 11-month period, while withdrawals decreased by 7.1 percent to $493 million.
