By Katherine K. Chan, A reporter
NET foreign direct INFLOWS Investments (FDIs) in the Philippines dropped to $7.791 billion by 2025, its lowest level five years, preliminary data from the Bangko Sentral ng Pilipinas (BSP). he showed.
This was the lowest annual level of FDI since 2020 or when inflows fell to $6.822 billion. Excluding the pandemic period, this was the lowest level since the net FDI inflow of 5.639 billion in 2015.
The 2025 year-end figure was also 17.1% lower than the $9.398 billion in 2024 but exceeded the BSP’s estimate of $7 billion per year.
“For the full year of 2025, equity investments have been found mainly in Japan, the United States, Singapore and South Korea, and are concentrated in the manufacturing, retail and financial industries, as well as the financial and insurance industries,” the central bank said in a statement released late Tuesday.
The full-year rate was reduced by a 27% year-over-year decline in capital invested in debt instruments to $5.269 billion from $7.221 billion in 2024.
This mainly includes intercompany borrowing or borrowing between foreign direct investors and their subsidiaries or affin the Philippines, according to the BSP. Some investments are made by subsidiaries of non-residents or their associates to direct resident investors or known as reverse investments.
Meanwhile, investments in stocks and mutual funds fell by 15.9% to $2.523 billion in 2025 from $2.177 billion last year.
Total investment by non-residents in equity, excluding reinvestment of earnings, increased by 31.4% to $1.324 billion in 2025 from $1.008 billion last year.
This happened as equity placements fell by 23.1% to $1.984 billion last year from $2.58 billion in 2024. On the other hand, withdrawals fell 58% year over year to $660 million from $1.572 billion.
On the other hand, reinvestment of earnings increased by 2.5% to $1.198 billion in 2025 from $1.17 billion last year.
John Paolo R. Rivera, a senior researcher at the Philippine Institute for Development Studies, said local and global uncertainty and strong competition in the Association of Southeast Asian Nations (ASEAN) region may have reduced net FDI inflows last year.
“FDI has decreased due to global tightening fifinancial conditions, global uncertainty, and domestic constraints such as slow growth, infrastructure delays, and investment climate concerns, coupled with strong competition from other ASEAN economiesmies,” said Mr. Rivera on Viber.
THREE MONTHS DOWN IN DECEMBER
In December, the FDI income stood at three low levels of 560 billion but increased by 31.2% from the income of $ 427 million seen in the same month in 2024.
This was the lowest monthly figure since September’s $316 million.
Month-over-month, revenue fell 37.4% from $894 million in November.
“Japan was the leading source of FDI, with the majority of inflows directed to financial and insurance activities during the month,” the BSP said.
The end-of-year season and delayed investment decisions may have led to a three-month low in December, SM Investments Corp. economist said. Group Robert Dan J. Roces.
Meanwhile, Mr. Rivera said investor caution amid the global shock may reduce cash flows later this year.
“The decline in December reflects the effects of the end of the year period, repatriation of profits, and a sense of caution among investors amid the volatility of the peso and global uncertainty,” he said.
BSP data showed that investments in equity shares and investment funds more than doubled (165.3%) to $260 million from $98 million last year.
Total investment in equity capital excluding reinvestment of earnings increased ninefold (802.8%) to $180 million in December from $20 million last year.
Once down, equity inflows jumped 29.3% to $243 million in December from $188 million a year earlier, while withdrawals fell 61.9% to $64 million from $168 million.
Meanwhile, reinvestment of earnings reached $80 million, up 2.7% from $78 million in the same month in 2024.
However, net investment in debt instruments was only $300 million in December, down 8.7% from $329 million in the comparable period last year.
By 2026, net FDI inflows may rebound despite potential drag from the ongoing Middle East crisis, Mr. Roses.
“While the Iran conflict adds uncertainty to high oil prices and market volatility, we still expect FDI to recover gradually in 2026, particularly in manufacturing, renewable energy, and logistics, as global financial conditions improve and supply chain diversification continues,” he said.
By 2026, the central bank sees net FDI inflows reaching $7.5 billion by the end of the year.
FDIs account for the investment of foreign investors in local enterprises where they hold at least 10% of the equity capital, as well as the investment of a non-resident company or its affiliates in a resident direct investor. It can be in the form of equity, income reinvestment or loan.
The BSP’s FDI data covers actual investment flows, compared to the Philippine Statistics Authority’s foreign investment data which includes investment commitments that may not be fully realized over a period of time.
