THE DECLINE OF net inflows of foreign direct investments (FDIs) to the Philippines is bad news for the business sector, as this also points to the hesitance of foreign businesses and investors to put their money in the country.
According to the Bangko Sentral ng Pilipinas (BSP), FDI net inflows reached $498 million in March this year, reflecting a 27.8-percent drop compared to the $689 million logged during the same period last year.
In February this year, the BSP said net inflows of FDIs reached $529 million, declining by 61.9 percent from the $1.4 billion recorded in February last year.
For the first three months of the current year, FDI net inflows decreased by 41.1 percent to $1.8 billion from the $3 billion recorded in the same period last year.
According to the BSP, FDIs include investments by a non-resident direct investor in a resident enterprise whose equity capital in the latter is at least 10 percent, and investments made by a non-resident subsidiary or associate in its resident direct investor. The latter can be in the form of equity capital, reinvestment of earnings, and borrowings.
Japan, the United States, Ireland, Malaysia, Singapore, and South Korea were the top sources of FDIs to the Philippines, and were invested in real estate, manufacturing, financial and insurance, and administrative and support services industries.
NOT ACHIEVING TARGETS
What is disappointing is the Marcos administration said in January this year that it will double its efforts to enhance the flow of FDIs into the country.
This, as FDI net inflows to the country was short of target in 2024, or reaching $8.93 billion. The target for last year was $9 billion while the figure for 2023 was $8.925 billion.
“We will find out and if there is any deficiency, our business experts and our heads of agencies will immediately take steps to address whatever the impact will be,” said Palace Press Officer and Presidential Communications Office (PCO) Undersecretary Claire Castro.
She added that President Ferdinand R. Marcos Jr. is also holding meetings to make sure that foreign investments in the country would further improve.
And in February, the Anti-Money Laundering Council (AMLC) said the removal of the Philippines from the grey list of the Financial Action Task Force’s (FATF) will strengthen the country’s position as an “attractive destination” for FDIs.
“Countries in the FATF grey list are placed under increased monitoring. This is a burdensome process for banks and other financial institutions. This process discourages correspondent banking relationships and international financial flows into the country,” it said.
“Exiting the FATF grey list is a significant step in strengthening the Philippines’ financial system and maintaining global confidence. The government remains committed to ensuring long-term compliance with international standards,” AMLC added.
But the latest figures on FDI net inflows show otherwise
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