MANILA, Philippines – Net inflows of foreign direct investments (FDIs) plunged 85.2% in December 2024 amid uncertainties in the global economy, data from the Bangko Sentral ng Pilipinas (BSP) showed.
FDI net inflows inched to just $110 million in December, 85.2% lower year-on-year. This is the lowest net inflow recorded since December 2013’s $102.16 million.
Despite the slump, 2024 ended a two-year streak of declining inflows as the BSP logged $8.93 billion in FDIs entering the Philippines that year. The figure is 0.1% higher than last year’s P8.92 billion.
The BSP attributes the FDI decline in December to corporations’ increased debt repayments to their nonresident direct investors.
“As a result of these higher debt repayments, net foreign investments in debt instruments shifted to net outflows of US$19 million in December 2024 from net inflows of US$618 million in December 2023,” the monetary authority said.
Japan was the top source of FDIs in the Philippines, accounting for 38% of FDIs entering the Philippines in 2024. Tokyo was followed by the United Kingdom (35%), United States (10%), and Singapore (8%).
Over half of FDIs last year went to the manufacturing sector.
Rizal Commercial Banking Corporation chief economist Michael Ricafort attributed the FDI inflow slump to investors’ anticipation of the implementing rules and regulations (IRR) of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act.
“For the coming months, the release of the CREATE MORE IRR could make foreign investors/FDIs to become more decisive in locating in the country amid enhanced incentives for foreign investors,” he said.
Ricafort added that foreign investors may have been waiting for the BSP and Federal Reserve to lower key interest rates. The BSP held rates steady in the Monetary Board’s February meeting in order to closely monitor the impact of US President Donald Trump’s policies on the global economy. – Rappler.com