By Katherine K. Chan, Reporter
NET INFLOWS of foreign direct investments (FDIs) into the Philippines plummeted to $7.791 billion in 2025, its lowest level in five years, preliminary Bangko Sentral ng Pilipinas (BSP) data showed.
This was the lowest yearly FDI level since 2020 or when net inflows slumped to $6.822 billion. Excluding the pandemic period, this was the lowest since the $5.639-billion FDI net inflows in 2015.
The end-2025 tally was also 17.1% lower than the $9.398 billion in 2024 but exceeded the BSP’s $7-billion estimate for the year.
“For the full year of 2025, equity capital placements were sourced primarily from Japan, the United States, Singapore, and South Korea, and were channeled largely into the manufacturing, wholesale and retail trade, and financial and insurance industries,” the central bank said in a statement released late on Tuesday.
The full-year level was dragged down by the 27% year-on-year decline in net investments in debt instruments to $5.269 billion from $7.221 billion in 2024.
These include mainly intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines, according to the BSP. The rest are investments made by nonresident subsidiaries or associates in their resident direct investors or known as reverse investment.
Meanwhile, investments in equity and investment fund shares jumped by 15.9% to $2.523 billion in 2025 from $2.177 billion in the prior year.
Nonresidents’ net investments in equity capital, other than the reinvestment of earnings, rose by 31.4% to $1.324 billion in 2025 from $1.008 billion a year earlier.
This came even as equity placements slid by 23.1% to $1.984 billion last year from $2.58 billion in 2024. On the other hand, withdrawals plunged by 58% annually to $660 million from $1.572 billion.
On the other hand, reinvestment of earnings inched up by 2.5% to $1.198 billion in 2025 from $1.17 billion in the previous year.
John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said local and global uncertainties as well as tighter competition in the Association of Southeast Asian Nations (ASEAN) region may have softened FDI net inflows last year.
“FDI fell due to tighter global financial conditions, geopolitical uncertainty, and domestic constraints such as slower growth, infrastructure delays, and investment climate concerns, alongside stronger competition from other ASEAN economies,” Mr. Rivera said via Viber.
THREE-MONTH LOW IN DECEMBER
In December, FDI net inflows stood at a three-month low of $560 million but was up 31.2% from the $427-million inflows seen in the same month in 2024.
This was the lowest monthly tally since $316 million in September.
Month on month, inflows fell by 37.4% from $894 million in November.
“Japan was the leading source of FDIs, with most inflows directed to the financial and insurance activities during the month,” the BSP said.
Year-end seasonality and postponed investment decisions likely led to the three-month low level in December, SM Investments Corp. Group Economist Robert Dan J. Roces said.
Meanwhile, Mr. Rivera said investors’ cautious stance amid global shocks may have dampened flows toward the end of the year.
“December’s dip likely reflects year-end timing effects, profit repatriation, and cautious investor sentiment amid peso volatility and global uncertainty,” he said.
BSP data showed that investments in equity and investment fund shares more than doubled (165.3%) to $260 million from $98 million a year earlier.
Net investments in equity capital other than the reinvestment of earnings also soared by over ninefold (802.8%) to $180 million in December from $20 million in the previous year.
Broken down, equity placements jumped by 29.3% to $243 million in December from $188 million a year ago, while withdrawals slumped by 61.9% to $64 million from $168 million.
Meanwhile, reinvestment of earnings reached $80 million, rising by 2.7% from $78 million in the same month in 2024.
However, net investments in debt instruments were only $300 million in December, falling by 8.7% from $329 million in the comparable year-ago period.
For 2026, FDI net inflows may still rebound despite potential drags from the ongoing Middle East crisis, Mr. Roces said.
“While the Iran conflict adds uncertainty through higher oil prices and market volatility, we still expect FDI to gradually recover in 2026, particularly in manufacturing, renewable energy, and logistics, as global financial conditions ease and supply-chain diversification continues,” he said.
For 2026, the central bank sees FDI net inflows reaching $7.5 billion by yearend.
FDIs account for foreign investors’ investments in local businesses where they hold at least a 10% equity capital, as well as investments by a nonresident subsidiary or associate in its resident direct investor. It can be in the form of equity capital, reinvestment of earnings or borrowings.
The BSP’s FDI data cover actual investment flows, compared to the Philippine Statistics Authority’s foreign investments data which include investment commitments that may not be fully realized in a given period.
