Debt repayments weigh on FDI inflows in December -BSP

Foreign direct investments into the Philippines recorded a net inflow in December 2024, though significantly lower both month-on-month and year-on-year, primarily due to local firms' debt repayments to their non-resident investors.

Data released by the Bangko Sentral ng Pilipinas on Monday showed that FDI—a key driver of capital and job creation for the local economy—registered a net inflow of $110 million in December 2024. This was markedly lower than the $922 million net inflow recorded in November 2024.

Year-on-year, the December 2024 net inflow was down by 85.2% compared to the $743 million recorded in December 2023.

“While nonresidents’ net equity capital investments rose, FDI declined due to increased debt repayments by resident corporations to their nonresident direct investors,” the BSP stated.

“As a result of these higher debt repayments, net foreign investments in debt instruments shifted to net outflows of $19 million in December 2024 from net inflows of $618 million in December 2023,” the central bank added.

The BSP defines FDI as investments made by a foreign direct investor in a local enterprise where the investor holds at least 10% equity, or an investment made by a foreign subsidiary in its resident direct investor.

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

BSP data also showed that reinvestment of earnings declined by 14.7%, falling to $80 million from $94 million in December 2023.

Meanwhile, foreigners’ net investments in equity capital—excluding reinvestment of earnings—jumped by 58%, reaching $49 million compared to $31 million in December 2023.

The central bank reported that foreign equity capital placements in December 2024 primarily originated from Singapore, Japan, the United States, and South Korea.

“These investments were mostly directed towards the information and communication, manufacturing, financial and insurance, construction, and real estate industries,” the BSP noted.

December’s FDI net inflows brought total foreign investments for 2024 to $8.93 billion, reflecting a slight increase of 0.1% from the $8.925 billion recorded in 2023.

The BSP emphasized that its FDI statistics differ from investment data reported by other government agencies, as its figures reflect actual investment inflows. 

In contrast, the Philippine Statistics Authority (PSA) publishes approved foreign investments data sourced from Investment Promotion Agencies, which represent investment commitments or pledges that may not necessarily materialize in full within a given period. — DVM, GMA Integrated News