FDI inflows sink to over 5-year low

Net inflows of foreign direct investments (FDI) into the Philippines plunged to their lowest monthly level in over five years in September, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.

Based on preliminary central bank data, FDI net inflows fell by 25.8% to USD 320 million from USD 432 million a year ago.

This marked the lowest monthly FDI inflow in more than five years or since the USD 313.79 million recorded in April 2020.

Month on month, inflows sank by 37.7% from USD 514 million in August.

“Foreign direct investments into the Philippines posted net inflows of USD 320 million in September 2025,” the BSP said in a statement on Wednesday. “Japan was the top source of FDIs, while manufacturing was the biggest recipient of FDIs during the month.”

Investments in equity and investment fund shares rose by 27.8% to USD 120 million in September from USD 94 million in the same month in 2024.

Net investments in equity capital other than reinvestment of earnings soared to USD 35 million, nearly five times (378.2%) the USD 7 million seen a year earlier.

Broken down, equity capital placements jumped by an annual 20.8% to USD 99 million, while withdrawals fell by 14.4% to USD 64 million.

Nonresidents’ reinvestment of earnings also dipped by 2.1% to USD 84 million in September from USD 86 million last year.

Meanwhile, net investments in debt instruments dropped by 40.7% to USD 201 million from USD 338 million a year prior.

These consisted mainly of intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines, according to the central bank.

Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said a combination of global and domestic factors dragged FDI net inflows to an over five-year low.

“Globally, investors remain cautious amid slower growth in major economies and persistent geopolitical uncertainties,” he said in a Viber message.

“Domestically, while reforms like CREATE MORE (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy) and infrastructure programs are positive signals, structural bottlenecks and policy clarity issues continue to weigh on investor confidence.”

Economic managers have said that the ongoing flood control controversy that linked government officials, lawmakers and private contractors to massive corruption in public infrastructure projects weighed on business and investor sentiment.

Meanwhile, Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., also attributed the slump in foreign investments to high borrowing costs.

“September’s FDI slump to a five-year low reflects global uncertainty, high borrowing costs, and lingering policy gaps,” he said in a Viber message.

Lower nine-month FDI

For the first nine months of 2025, FDIs dropped by 22.2% to USD 5.537 billion from USD 7.118 billion in the same period last year.

This, as investments in equity and investment fund shares stood at USD 1.905 billion as of September, down by 16.8% from USD 2.289 billion the previous year.

Net foreign investments in equity capital, excluding reinvestment of earnings, went down by 33.3% year on year to USD 905 million at end-September from USD 1.357 billion a year ago.

Equity capital placements declined by 18.3% to USD 1.463 billion, while withdrawals rose by 28.7% to USD 558 million.

In the nine-month period, placements mostly came from Japan, the United States and Singapore, the central bank said.

“Industries that received most of these investments were manufacturing, wholesale and retail trade, and real estate,” the BSP added.

On the other hand, reinvestment of earnings climbed by 7.3% year on year to USD 1 billion by the end of September from USD 932 million previously.

BSP data also showed that nonresidents’ net investments in debt instruments of local affiliates declined by 24.8% to USD 3.632 billion as of September from USD 4.829 billion in the comparable year-ago period.

According to the central bank, the total FDI net inflows in the nine months to September accounted for 1.6% of the country’s gross domestic product.

Mr. Ravelas said meeting the BSP’s USD 7.5-billion FDI net inflow forecast for 2025 is “possible but tough.”

“With USD 5.5 billion so far, hitting BSP’s USD 7.5-billion target will need a strong Q4 rebound — possible but tough without fresh reforms,” he said. “[There could be] modest inflows in manufacturing and real estate if confidence improves.”

He added that the local manufacturing and real estate sectors may see modest gains in foreign investments if investor confidence rebounds.

“For businesses, now’s the time to push clarity and competitiveness to attract capital,” he said.

Meanwhile, Mr. Asuncion noted that the country’s policy implementation and investment climate will determine whether it can sustain improvements in FDI inflows.

“Looking ahead, we expect modest recovery in FDI inflows as reforms gain traction, but sustained improvement will depend on consistent policy execution and a more competitive investment environment,” he said. — Katherine K. Chan