EURO, Hong Kong dollar, US dollar, Japanese yen, pound and Chinese 100 yuan banknotes are seen in this picture illustration, Jan. 21, 2016. — REUTERS

By Luz Wendy T. Noble, Reporter

NET INFLOWS of foreign direct investments (FDIs) surged to a 23-month high in November, as the reopening of the global economy lifted investor sentiment.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed FDI net inflows in November surged by 96% to $1.095 billion from $559 million in the same month in 2020.

It also grew by 28% from the $855 million in October.   

FDI net inflows registered in November were the biggest since the $1.362 billion logged in December 2019. 

For the first 11 months of 2021, FDI inflows jumped by 52.5% to $9.238 billion, already exceeding the BSP’s $8-billion end-2021 projection.

“The general reopening of the global economy is one major reason, and of course, the improved situation locally with lower COVID-19 (coronavirus disease 2019) cases in the fourth quarter of 2021 helped the rising numbers of FDI and its prospects,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

Investor sentiment was lifted by the government’s shift to an alert level system with localized lockdowns, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.   

Metro Manila was placed under the more relaxed Alert Level 2 starting November, as COVID-19 infections showed a downtrend.

BSP data showed foreign investments in debt instruments surged by 109.3% year on year to $896 million in November from $428 million.

Reinvestment of earnings rose by 25.2% to $81 million during the month from $64 million in November 2020. 

Investments in equity and investment fund shares also expanded by 52.4% year on year to $199 million in November from $131 million in the same month in 2020. 

FDIs in equity capital also climbed by 78.8% year on year to $118 million from $66 million. This, as placements increased by 37.9% to $132 million, while withdrawals dropped by 52.8% to $14 million. 

Mr. Asuncion said FDI prospects may be improved in the next few months as more countries contain the Omicron surge.

“I think that FDI trend will continue to improve with the Omicron surge hopefully in the rearview mirror. However, as most health and epidemiology experts say, it is too early to celebrate and that we need to approach the move forward with cautious optimism,” Mr. Asuncion said. 

He said that while the impending monetary policy tightening in the United States will likely be more of an issue to “hot money” than FDIs, long-term investors will be monitoring the country’s leadership change. The national elections will be held on May 9.   

“Real FDI and long-term investments of capital, equipment and hard assets, I believe, will continue to grow as long as continued structural reforms are carried out and pushed by a government with good governance practices in place,” Mr. Asuncion said.

Meanwhile, Mr. Ricafort said the passage of key legislation like the amendments to the Public Service Act (PSA) could also attract more FDIs in the coming months. 

The Congress last week has ratified the bill amending the PSA, which will now allow 100% foreign ownership in industries like telecommunications, airlines and railways.

For 2022, the BSP projects FDI will reach $8.5 billion.