Uncertainties dragged PH investment inflows in November — BSP data

Investment inflows into the Philippines posted a double-digit decline in November 2024, with the market factoring in possible protectionist policies from US President Donald Trump who was elected into office during the month.

Data released Monday by the Bangko Sentral ng Pilipinas (BSP) showed that foreign direct investment (FDI) net inflows stood at $901 million in November, down by 19.8% from the $1.123 billion the same month in 2023, and the $1.022 billion in October.

Nonresidents’ net investments in debt instruments fell by 17.9% year-on-year to $791 million, while net investments in equity capital were reduced by 58.9% to $35 million from $85 million. Reinvestment of earnings were unchanged at $74 million.

Bulk of the equity capital placements for the month were from Japan with 49%, the United States with 24%, and Singapore with 17%.

These were channeled mostly into manufacturing with 49%, real estate with 25%, financial and insurance with 9%, and administrative and support services with 5%. The remaining industries accounted for the 12% balance.

This brought the year-to-date FDI net inflows to $8.580 billion, up by 4.4% from the $8.220 billion in the comparable period of 2023.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort attributed the decline to uncertainties on protectionist policies that were announced by US President Donald Trump.

“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, who won the US elections on November 5, 2024,”  he said in a separate commentary.

Trump secured over 270 Electoral College votes needed to win the presidency in November, with his victory having major implications for trade and climate change policies, along with taxes and immigration.

Just last week, Trump suspended tariff hikes on Mexico and Canada, as he agreed to a 30-day pause in return for concessions on border and crime enforcement.

RCBC’s Ricafort also attributed November’s FDI decline to investors awaiting the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, which was signed by President Ferdinand “Bongbong” Marcos the same month.

CREATE MORE seeks to help enterprises recover from the impact of the COVID-19 pandemic by lowering the corporate income tax rates, and establish a more efficient approval process as it hiked the threshold for projects needing review by the Fiscal Incentives Review Board (FIRB). — RSJ, GMA Integrated News