Foreign direct investments (FDI) posted net inflows of US$609 million in January 2019, albeit lower by 38.2 percent than the US$986 million net inflows recorded in January 2018.1,2 The decline in FDI net inflows reflected the 65.3 percent drop in equity capital placements to US$184 million during the month from US$531 million for the same period a year ago. Equity capital placements during the month emanated mainly from Mauritius, South Korea, the United States, Singapore, and the Netherlands. These were channeled largely to the 1) financial and insurance, 2) administrative and support services, 3) real estate, 4) electricity, gas, steam and air-conditioning supply, and 5) information and communication industries. Further, the increase in equity capital withdrawals to US$229 million in January 2019 from US$58 million in January 2018 contributed to the decrease in FDI net inflows. Equity capital withdrawals in January 2019 were mainly from Japan. Meanwhile, net investments in debt instruments (consisting mainly of intercompany borrowings/lending between foreign direct investors

and their subsidiaries/affiliates in the Philippines) increased by 31 percent to US$577 million from the year-ago level of US$441 million. Likewise, reinvestment of earnings rose to US$76 million from US$71 million in the same month in 2018.

1 Based on the Balance of Payments and International Investment Position Manual, 6th edition (BPM6) which uses the asset and liability principle in the compilation of FDI statistics. Under the asset and liability principle, claims of non-resident direct investment enterprises from resident direct investors are presented as reverse investment under net incurrence of liabilities/non-residents' investments in the Philippines (previously presented in the Balance of Payments Manual, 5th edition (BPM5) as negative entry under assets/residents' investments abroad). Conversely, claims of resident direct investment enterprises from foreign direct investors are presented as reverse investment under net acquisition of financial assets/residents' investments abroad (previously presented as negative entry under liabilities/non-residents' investments in the Philippines).

2 BSP statistics on FDI covers actual investment inflows, which could be in the form of equity capital, reinvestment of earnings, and borrowings between affiliates. In contrast to investment data from other government sources, the BSP's FDI data include investments where ownership by the foreign enterprise is at least 10 percent. Meanwhile, FDI data of Investment Promotion Agencies (IPAs) do not make use of the 10 percent threshold and include borrowings from foreign sources that are non-affiliates of the domestic company. Furthermore, the BSP's FDI data are presented in net terms (i.e., equity capital placements less withdrawals), while the IPAs' FDI do not account for equity withdrawals.

Source: Bangko Sentral ng Pilipinas (BSP)