The country’s net inflows of foreign direct investments (FDI) grew by 4.4 percent to $8.6 billion in the first 11 months of last year compared to the same period in 2023, as most investors parked funds in debt instruments.

The Bangko Sentral ng Pilipinas (BSP) reported Monday that the FDI in November contributed $901 million, although this was lower than the $1.1 billion posted in the same month in 2023.

The BSP said the decline in November reflected lower investments in debt instruments, which dropped by nearly 18 percent to $791 million from $964 million in the same month last year.

Foreigners’ net investments in equity capital, excluding reinvestment of earnings, declined even faster, decreasing by nearly 60 percent to $35 million from $85 million.

Meanwhile, the reinvestment of earnings remained steady at $74 million.

The bulk of FDIs came from Japan, which accounted for 49 percent, followed by the United States with 24 percent and Singapore with 17 percent.

The top recipients of FDIs were the manufacturing sector, with a 49-percent share, followed by real estate at 25 percent, and financial and insurance services at 9 percent.

However, from January to November, debt instruments still accounted for nearly $6 billion of the total FDI net inflows of $8.6 billion.

Global inflation

Jonathan Ravelas, financial market analyst and senior adviser at Reyes Tacandong & Co., said the FDIs were tempered by elevated global inflation rates.

For example, US inflation grew by 0.3 percentage points to 2.7 percent last November, higher than the levels recorded four months prior.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said investors diversified their investments amid an upbeat economic outlook for the United States following the victory of Donald Trump as president for a second time.

Market analysts projected bigger earnings for American firms as Trump promised lower corporate income taxes to boost production.

Ricafort expects the Philippines to sustain FDI inflows as the BSP adjusts its policy on lending rates to drive stronger household consumption through loans.

He said the newly enacted Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) law will make investors “more decisive” about expanding their businesses in the Philippines.

CREATE MORE offers registered business enterprises a lower corporate income tax rate of 20 percent, down from 25 percent, and a bigger deduction on power expenses — 100 percent, up from 50 percent — for manufacturing firms.