Category : Press Release
Date : June 10, 2021
Agency : Bangko Sentral ng Pilipinas
Title : March 2021 FDI Grows by 139.5% YoY; Q1 YoY Growth at 45.1%
Article : ?Foreign direct investment (FDI) net inflows grew by 139.5 percent to US$808 million in March 2021 from the US$337 million net inflows recorded in the same month last year.1,2 The favorable performance in March brought the cumulative FDI net inflows to US$2.4 billion in the first quarter of 2021, higher by 45.1 percent than the US$1.6 billion net inflows recorded in the same period last year (Table 2). The increase in FDI was mainly due to the 113.2 percent growth in non-residents’ net investments in debt instruments to US$1.4 billion from US$671 million. Likewise, reinvestment of earnings improved by 5.4 percent to US$225 million from US$213 million comparable year-ago level.

March 2021 FDI increased on account of improved investor sentiment amid the gradual resumption of domestic activities, while adhering to the minimum health standards, and government efforts to accelerate the vaccination program. In particular, FDI net inflows during the period expanded due to the substantial increase in non-residents’ net investments in debt instruments to US$380 million from US$45 million in the comparable month last year.3

Likewise, non-residents’ net investments in equity capital rose by 52.8 percent to US$349 million in March 2021 from US$229 million a year ago. This developed as equity capital placements expanded by 35.9 percent to US$377 million (from US$278 million), while withdrawals declined by 42.6 percent to US$28 million (from US$49 million). Bulk of the equity capital placements came mostly from Singapore, Japan, and the United States. Said investments were channeled mainly to the 1) electricity, gas, steam, and air-conditioning; and 2) manufacturing industries. Similarly, reinvestment of earnings grew by 23.3 percent to US$79 million from US$64 million last year.

Meanwhile, the March growth in net investments in equity capital reduced the year-to-date contraction to 4.3 percent (from 29.1 percent in February 2021), bringing the level to US$721 million. For the first three months of 2021, equity capital placements amounted to US$828 million, while equity withdrawals reached US$ 107 million. Equity capital placements during the quarter were sourced largely from Singapore, Japan, the United States, and the Netherlands. These were invested primarily to the 1) electricity, gas, steam, and air-conditioning; 2) financial and insurance; and 3) manufacturing industries.

1 The BSP statistics on FDI are compiled based on the Balance of Payments and International Investment Position Manual, 6th Edition (BPM6). FDI includes (a) investment by a non-resident direct investor in a resident enterprise, whose equity capital in the latter is at least 10 percent, and (b) investment made by a non-resident subsidiary/associate in its resident direct investor. FDI can be in the form of equity capital, reinvestment of earnings, and borrowings.
2 The BSP FDI statistics are distinct from the investment data of other government sources. BSP FDI covers actual investment inflows. By contrast, the approved foreign investments data that are published by the Philippine Statistics Authority (PSA), which are sourced from Investment Promotion Agencies (IPAs), represent investment commitments, which may not necessarily be realized fully, in a given period. Further, the said PSA data are not based on the 10 percent ownership criterion under BPM6. Moreover, the BSP’s FDI data are presented in net terms (i.e., equity capital placements less withdrawals), while the PSA’s foreign investment data do not account for equity withdrawals.
3 Net investments in debt instruments consist mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines. The remaining portion of net investments in debt instruments are investments made by non-resident subsidiaries/associates in their resident direct investors, i.e., reverse investment.
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