MANILA - The Philippines posted a record-high $10.5 billion in net inflows of foreign direct investments in 2021, the Bangko Sentral ng Pilipinas said on Thursday.

FDI net inflows sustained its growth momentum in December last year, increasing by 59 percent year-on-year to reach $1.1 billion from the $671 million net inflows in December 2020, the BSP said.

This development brought the full-year 2021 FDI net inflows to a new record level of US$10.5 billion, breaching the previous high of US$10.3 billion in 2017.

The 2021 level represents a 54.2 percent increase from the $6.8 billion net inflows recorded in 2020, and broke the previous high of $10.3 billion posted in 2017.

"The growth in FDI reflected continued positive foreign investor sentiment on the country amid expectations of a rebound in domestic economic activity and declining COVID-19 reported cases, as well as the strengthening of the global economy," the BSP said.

The Philippines has historically lagged behind its neighbors in Southeast Asia in terms of attracting foreign investments. But the government is expecting to attract more foreign capital after easing restrictions on foreign investments.

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The cumulative net inflows rose on the back of the 80.4 percent expansion in non-residents’ net investments in debt instruments to US$7.5 billion from US$4.2 billion in 2020.[3]

Likewise, reinvestment of earnings grew by 34.7 percent to US$1.3 billion from US$944 million. Non-residents’ net investments in equity capital (other than reinvestment of earnings) registered a moderate growth of 0.7 percent and settled at US$1.7 billion.

Equity capital placements amounted to US$2.1 billion, while withdrawals stood at US$399 million. Equity capital placements originated mostly from Singapore, Japan, the United States, and the Netherlands. Capital infusions were channeled mainly to the 1) manufacturing; 2) electricity, gas, steam, and air-conditioning; 3) financial and insurance; and 4) real estate industries.

The increase in the FDI net inflows in December 2021 was mainly due to the 60.0 percent growth in non-residents’ net investments in debt instruments to US$634 million from US$396 million in December 2020.

Similarly, non-residents’ net investments in equity capital (other than reinvestment of earnings) registered a 59.5 percent upturn to US$336 million from US$211 million in the comparable month in 2020. Net investment in equity capital rose as the increase in equity capital placements (to US$371 million from US$231 million) more than offset the rise in equity capital withdrawals (to US$35 million from US$20 million).

Equity capital placements during the month emanated largely from Singapore, Japan, and the Netherlands. These were directed mainly to the 1) electricity, gas, steam, and air-conditioning; 2) manufacturing; and 3) financial and insurance industries. Meanwhile, reinvestment of earnings amounted to US$96 million in 2021, up by 50.3 percent from US$64 million.