Philippines ends 2021 with record high of $10.5B in foreign direct investment

The Philippines closed the year 2021 with net inflows of foreign direct investment (FDI) hitting a record high amid strong hopes that the country would recover from the COVID-19 pandemic. 

The central bank defines FDI as an investment by a non-resident or foreign direct investor in a resident enterprise or an investment made by a non-resident subsidiary or associate in its resident direct investor.

FDI can be in the form of equity capital, reinvestment of earnings, and borrowings.

Central bank figures showed FDI net inflows for January to December 2021 totaled $10.5 billion, breaching the previous record high of $10.3 billion in 2017.

The 2021 FDI net inflow level translated to an increase of 54.2% from $6.8 billion posted in 2020.

“The growth in FDI reflected continued positive foreign investor sentiment on the country amid expectations of a rebound in domestic economic activity and declining COVID-19 reported cases, as well as the strengthening of the global economy,” the Bangko Sentral ng Pilipinas (BSP) said.

The central bank said cumulative net inflows rose on the back of the 80.4% expansion in non-residents’ net investments in debt instruments to $7.5 billion from $4.2 billion in 2020.

Reinvestment of earnings also grew 34.7% to $1.3 billion from $944 million. 

Meanwhile, foreigners’ net investments in equity capital - other than reinvestment of earnings - registered a moderate growth of 0.7% and settled at $1.7 billion.

Equity capital placements amounted to $2.1 billion, while withdrawals stood at $399 million.

Equity capital placements originated mostly from Singapore, Japan, the United States, and the Netherlands, according to the BSP.

The central bank said capital infusions were channeled mainly to the manufacturing; electricity, gas, steam, and air-conditioning; financial and insurance; and real estate industries. — VBL, GMA News