MANILA — Net inflows of foreign direct investments (FDIs) declined sharply to USD443 million in January, down from USD1.5 billion in the same month last year, as global geopolitical tensions weighed on investor confidence, the Bangko Sentral ng Pilipinas (BSP) said.

FDIs refer to investments made by a non-resident direct investor in a resident enterprise where the investor holds at least 10 percent equity, as well as investments by non-resident subsidiaries or affiliates in their resident direct investor. These may take the form of equity capital, reinvested earnings, and borrowings.

The BSP said Japan remained the top source of FDIs during the period, with most investments directed to manufacturing, real estate, and wholesale and retail trade. The United States and South Korea were also among the major sources of inflows.

An economist said the decline reflects continued investor caution amid global uncertainties.

“The weaker FDI inflow in January likely reflects continued investor caution amid elevated geopolitical risks, tight global financial conditions, and uncertainty over the global growth outlook, which appear to have weighed on intercompany funding flows,” said Carlo Asuncion, chief economist at Union Bank of the Philippines.

He added that ongoing tensions in the Middle East may further pressure investment flows in the near term.

“Going forward, the ongoing Middle East tensions add to downside risks for FDI, as they could prolong volatility in energy prices and further dampen investor sentiment, suggesting near-term inflows may remain uneven.”