The country’s foreign direct investment (FDI) net inflows went up by two percent to $2.439 billion as of end-March compared to $2.391 billion same time last year, according to the Bangko Sentral ng Pilipinas (BSP).

For the month of March only, FDI net inflows were lower by 9.8 percent to $727 million from March 2021’s $893 million with investors still concerned about the long-term impact of the Russia-Ukraine conflict on both global and domestic growth, and the inflation outlook.

BSP registers FDIs as equity capital, reinvestment of earnings, and borrowings.

The BSP said despite the decline in the March data, the first quarter numbers were positive due to higher net inflows from intercompany borrowing/lending between foreign direct investors and their subsidiaries which “continued to make up for the lower net inflows from new equity and reinvested earnings.”

“While the country’s macroeconomic fundamentals remain sound, external risks, such as the impact of Russia’s invasion of Ukraine on commodities and financial market condition, the start of policy tightening in several major central banks and the resurgence of COVID-19 cases in many Asian economies, may have contributed to investors’ concern about the outlook on the global economic recovery,” said the BSP on Monday, June 13.

For the January to March period, non-residents’ net cumulative investments in debt instruments increased by 33.5 percent to $1.899 billion from $1.423 billion in the same period in 2021.

Meantime, non-residents’ net investments in equity capital other than reinvestment of earnings declined by 57.6 percent to $311 million from $733 million same period last year. Reinvestment of earnings also dropped by 2.7 percent to $299 million from $236 million.

Equity capital placements also declined by 58.1 percent to $352 million from $840 million, which the BSP said was “slightly offset by the 61.1 percent decline in withdrawals” to $42 million from $107 million.

The bulk of the equity capital placements came from investors from Japan, the US, Kuwait, and Singapore. These funds were invested in the manufacturing, real estate, and financial and insurance industries.

For March only, data showed that FDI net inflows came from non-residents’ net investments in debt instruments of local affiliates. This grew by 45.1 percent to $543 million from $374 million same period in 2021.

Non-residents’ net investments in equity capital decreased by 69.6 percent to $106 million from $349 million as equity capital placements also fell by 68.7 percent to $118 million from $378 million. But, as explained by the BSP, this was “somewhat mitigated by the 58.2 percent decline in equity capital withdrawals” of $12 million from $28 million.

For the month of March, reinvestment of earnings totalled $78 million, down by 5.4 percent from $82 million.

The BSP is projecting FDI net inflows to reach $11 billion by end-2022 and $11.8 billion next year.

In 2021, FDI net inflows increased to an all-time high of $10.52 billion, up by 54.2 percent from $6.82 billion in 2020. The previous record level was $10.3 billion in 2017.