By Prince Golez
Investor confidence remains strong in the country, Trade Secretary Alfredo Pascual as he cited high reinvested earnings and rising foreign investment approvals despite a decline in foreign direct investment (FDI) inflows in the first semester of 2023.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that FDI declined by 20 percent to $3.9 billion in the first half of 2023 compared to the same period last year.
“In summary, although FDI in the Philippines declined in the first semester of 2023, there remains solid foreign investor confidence in the country, as demonstrated by the high reinvested earnings and the rising foreign investment approval by BOI and other IPAs (Investment Promotion Agencies),” said Pascual.
FDI numbers, according to him, reflect decisions investors made well before the actual funds’ inflow recorded by BSP.
Global financial conditions, especially the high inflation and interest rates during the first half of 2023, contributed to this FDI decline, he added.
But, Pascual said such decline is not a phenomenon unique to the Philippines, claiming that other ASEAN countries also experienced drops in their FDI.
“Factors such as inflation rates and investment rates substantially influence FDI decisions. Stable inflation and competitive interest rates generally attract FDI, whereas high inflation and unfavorable rates can repel foreign investors,” the DTI official said.
“Under the Marcos Jr. administration, a representative metric of investment performance is the foreign investment approvals by the DTI’s IPAs.”
Pascual also mentioned foreign investments in the Philippines that are not registered with the IPAs and they happen without going for incentives.
There has been a consistent increase in these approvals by the DTI-Board of Investments and other IPAs since 2022, he furthered.
Total IPA approvals from January to June 2022 were at $1.06 billion; from July to December 2022, US$3.28 billion; and, from January to June 2023, and US$8.45 billion.