FILE PHOTO: A logo of Bangko Sentral ng Pilipinas (Central Bank of the Philippines) is seen at their main building in Manila, Philippines March 23, 2016. REUTERS/Romeo Ranoco
MANILA, Philippines — Long-term capital flows into the Philippines surged by more than a fifth in March, growing for the third consecutive month this year as investments from foreign companies in debt instruments swelled and drove the increase.
Data released by the Bangko Sentral ng Pilipinas (BSP) on Monday showed that net foreign direct investments (FDI) grew 23.1 percent to $686 million from $557 million in March 2023.
The BSP said the March portfolio brought the cumulative FDI net inflows to $3 billion during the first quarter of the year, marking a 42-percent growth from the $2.1 billion recorded in the same period in 2023.
READ: Foreign direct investments zoom to fresh 2-yr high in Feb
“FDI increased during the quarter on the back of the country’s strong growth prospects and moderating inflation,” the BSP said regarding the growth trend.
Fast growth
Commenting on the March figures, Rizal Commercial Banking Corp. chief economist Michael Ricafort also pointed to improved economic and financial markets performance in recent months.
“Philippine economic growth is among the fastest in [the Association of Southeast Asian Nations], Asia, and long-term US and local interest rates already eased from the immediate highs since November 2023, thereby encouraging more FDIs to come into the country,” he said.
READ: PH lags behind Asian peers in foreign investments
He also cited favorable demographics and lower long-term interest rates and borrowing costs that helped boost investments globally.
Investment breakdown
The BSP said that nonresidents’ net investments in debt instruments during the month rose by 19 percent year-on-year to $465 million from $391 million a year ago.
Further, it said that net investment in equity capital, other than reinvestment of earnings, from these investors soared by 67.1 percent to $157 million from $94 million.
In contrast, the reinvestment of earnings from foreign firms saw a decline of 11.3 percent, falling to $64 million from $72 million.
The BSP also said that equity capital placements during the month came mostly from Japan with a 64 percent share.
At the same time, 16 percent of the investments came from Singapore, while 10 percent came from the United States.
By quarter, investments came mostly from the Netherlands and Japan, which accounted for 68 percent and 21 percent of the total, respectively.
The BSP said these were invested largely in manufacturing, financial, and insurance, as well as in real estate.
A monthly breakdown by industry showed that 66 percent went to manufacturing, 14 percent to financial and insurance, and 11 percent to real estate.
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Still, a first-quarter review showed that 71 percent went to the financial and insurance sector, while manufacturing and real estate had a 16 percent and 5 percent share, respectively.
