Foreign direct investment (FDI) in the Philippines showed a decline of 14.5 percent year-on-year in August 2024, totaling USD813 million in net inflows, compared to US$951 million in August 2023, according to the latest data from the Bangko Sentral ng Pilipinas (BSP). This marks a significant reduction, primarily driven by a sharp contraction in nonresidents’ investments in debt instruments.
The largest contributor to the decrease was a 21.6 percent drop in nonresidents’ net investments in debt instruments, which fell to USD529 million from USD675 million in August 2023. Reinvestment of earnings also saw a decline, falling 9.4 percent to USD217 million from USD240 million in the same period last year.
However, there was an upside as nonresidents’ net investments in equity capital (excluding reinvested earnings) surged by 83.6 percent, reaching USD66 million, up from USD36 million in August 2023. This growth in equity capital placements was primarily attributed to investors from Japan and the United States, with key investments directed towards the manufacturing, real estate, and electricity sectors.
On a cumulative basis, the Philippines recorded a 3.9 percent increase in FDI for the January to August 2024 period, amounting to USD6.1 billion, compared to USD5.8 billion in the same period last year. This growth indicates a more favorable long-term outlook despite short-term challenges.
The BSP’s FDI statistics, which reflect actual investment inflows, continue to differ from other government sources, such as the Philippine Statistics Authority (PSA), which track approved investment commitments that may not always translate into actual inflows.
This data highlights ongoing shifts in foreign investment patterns, particularly the rise in equity placements, which suggest growing investor confidence in certain Philippine industries, even as traditional debt-based investments show signs of slowing down.
