Foreign direct investment (FDI) inflows, the kind that stays invested in the country, dropped by 20 percent on net basis in January this year, totaling USD731 million, down from USD914 million a year ago, according to data released by the Bangko Sentral ng Pilipinas (BSP).
The decline was driven largely by a 37.7 percent fall in nonresidents’ net investments in debt instruments, which sank to US5D19 million from USD833 million a year earlier. Debt instruments, a major FDI component, include intercompany borrowings between foreign investors and their Philippine affiliates.
Partially offsetting the downturn was a notable turnaround in equity capital investments (excluding reinvestment of earnings), which registered net inflows of USD88 million, reversing from net outflows of USD11 million in the same period last year. Nonresidents’ reinvestment of earnings also rose by 36 percent, reaching USD125 million, up from USD92 million in January last year.
The manufacturing, financial and insurance, and real estate sectors were the main beneficiaries of the equity capital inflows. These investments primarily originated from Japan, the United States, Singapore, and Malaysia, highlighting ongoing interest from traditional economic partners despite the overall slowdown.
The BSP compiles FDI data in accordance with the balance of payments and International Investment Position Manual, 6th Edition (BPM6), which considers equity holdings of at least 10 percent and includes reinvested earnings and intercompany loans. Unlike approved foreign investments reported by the Philippine Statistics Authority (PSA), BSP data reflect actual capital inflows.
The January figures underscore a cautious investment climate amid global economic headwinds, with the sharp drop in intercompany lending potentially indicating short-term liquidity tightening or strategic shifts in financing by multinational firms. Analysts will closely watch the coming months to assess whether the recovery in equity capital can sustain momentum and offset ongoing weakness in debt-related inflows.
