FDI net inflows jump 26% in March

By Katherine K. Chan, Reporter

NET INFLOWS of foreign direct investments (FDI) into the Philippines grew year on year for the first time in three months in March as investor confidence stood firm, the Bangko Sentral ng Pilipinas (BSP) said.

Based on preliminary BSP data released on Wednesday, FDI net inflows climbed by 26.1% to $611 million in March from $485 million a year earlier.

This was the first time since December last year that FDI net inflows posted annual growth.

“FDI net inflows posted a year-on-year increase in March primarily due to base effects and some improvement in investment sentiment, particularly in equity and intercompany funding flows,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said via Viber.

Month on month, net inflows declined by 4.2% from the revised $638 million in February.

March saw the lowest level of inflows in two months or since $469 million in January, which Mr. Asuncion attributed to cautious investor sentiment amid volatile global conditions.

Central bank data showed investments in equity and investment fund shares surged by 48.2% to $243 million in March from $164 million in the same month a year ago.

Nonresidents’ investments in net equity capital other than reinvestment of earnings also soared by 62.1% to $166 million in March from $102 million a year ago.

This came amid the 25.7% annual rise in equity capital placements to $186 million, and a 56.5% decline in withdrawals to $20 million.

Meanwhile, reinvestment of earnings stood at $78 million, 26% higher than $62 million recorded in the previous year.

Net investments in debt instruments likewise increased by 14.6% to $368 million from $321 million a year prior.

FIRST-QUARTER SLUMP
In the first quarter, total FDI net inflows fell by 16.97% to $1.717 billion from $2.068 billion in the same period last year.

SM Investments Corp. Group Economist Robert Dan J. Roces said this slide was not driven by weaker investor sentiment but likely reflected caution stemming from global uncertainty.

“The softer FDI numbers in March and in the first quarter (of 2026) suggest that investors have become more cautious amid global uncertainty, rather than signaling a sharp deterioration in sentiment toward the Philippines,” he said in a Viber message.

The US-Israeli war on Iran, which started on Feb. 28, roiled global oil markets and disrupted trade flows after access to the Strait of Hormuz was restricted.

The BSP also noted that stable foreign equity and reinvested earnings during the period showed foreign investors remained confident in the Philippines.

“From January to March 2026, foreign equity and reinvested earnings remained broadly steady, indicating continued investor confidence in the country,” the central bank said in a statement on Wednesday.

According to the BSP, foreign investments in equity capital other than reinvestment of earnings dipped by 1.1% year on year to $543 million as of March from $549 million previously.

On the other hand, net foreign investments in equity capital, excluding reinvestment of earnings, grew by 13.1% to $337 million in the first quarter from $298 million in the comparable year-ago period.

This came even as equity placements slipped by 1.8% to $390 million, while withdrawals fell by 46.5% to $53 million.

“Equity capital placements were sourced primarily from Japan, the United States, and Singapore, and were channeled largely into the manufacturing, financial and insurance, and real estate industries,” the central bank said.

Meanwhile, reinvestment of earnings amounted to $206 million in the three months to March, down 17.9% annually from $251 million.

BSP data also showed net investments in debt instruments declined by 22.7% to $1.175 billion in the first quarter from $1.52 billion a year ago.

Over the coming months, FDI inflows into the country will hinge on external factors like global interest rates, geopolitical developments, and risk sentiment, as well as on domestic growth and policy execution, Mr. Asuncion said.

“While near-term inflows may remain uneven, structural drivers such as manufacturing, infrastructure, and supply chain diversification should support a gradual recovery over the medium term,” he added.

On the other hand, Mr. Roces noted that better financing conditions will allow FDI inflows to gradually rise in the months ahead.

“Moving forward, inflows may gradually pick up if and when financing conditions improve, but competition for investment remains strong, making execution, policy stability, and infrastructure delivery increasingly important in turning interest into actual investments,” he said.

FDIs refer to cross-border investments in which a nonresident investor holds at least 10% equity in a resident enterprise. These may take the form of equity capital, reinvestment of earnings and intercompany borrowings.

The BSP’s FDI data reflect actual investment flows. This differs from the Philippine Statistics Authority’s approved foreign investment data, which represent investment commitments that may not necessarily be realized within the reference period.

The central bank expects FDI net inflows to reach $7.5 billion this year.