Philippine FDI net inflows plunge nearly 40% in October

Net inflows of  foreign direct investments (FDI) into the Philippines plunged nearly 40% year on year in October, as foreigners’ net investments in debt instruments slumped.

Based on preliminary Bangko Sentral ng Pilipinas (BSP) data, FDI net inflows declined by 39.8% to USD 642 million in October from USD 1.067 billion in the same month in 2024.

Despite this, October saw the highest monthly FDI level in three months or since the USD 1.271-billion net inflows posted in July.

Month on month, inflows more than doubled (100.6%) from the five-year low of USD 320 million in September.

“Foreign direct investments into the Philippines posted net inflows of USD 642 million in October 2025,” the BSP said in a statement released late on Monday. “Japan was the top source of FDIs, while corporations engaged in financial and insurance activities were the biggest recipients of FDIs during the month.”

The year-on-year decline came as nonresidents’ net investments in debt instruments plummeted by an annual 50.7% to USD 437 million from USD 888 million.

However, this was tempered by higher inflows recorded across other FDI components.

Investments in equity and investment fund shares jumped by 14.5% to USD 205 million in October 2025 from USD 179 million in the same month in the previous year.

Nonresidents’ net investments in equity capital, other than the reinvestment of earnings, jumped by 17.1% to USD 117 million in October from USD 100 million a year earlier.

Broken down, equity capital placements grew by 10.7% to USD 135 million in October from USD 122 million a year ago, while withdrawals dropped by 17.4% to USD 19 million from USD 23 million a year ago.

Meanwhile, reinvestment of earnings rose by 11.3% year on year to USD 88 million in October from USD 79 million a year ago.

HSBC economist for ASEAN Aris D. Dacanay noted that the annual drop indicated that the ongoing corruption scandal curbed FDI inflows, prompting investors to adopt a cautious “wait-and-see” stance.

“I think it does show that it is affected by the scandal,” he told a press briefing on Tuesday. “The dip in itself has led foreign investors to have this wait-and-see approach on what’s happening in the Philippines. So, I can’t say that it doesn’t (affect FDIs). What I have to say is that it won’t totally reverse it.”

Last year, a series of widespread flooding across the country exposed multiple anomalous flood control projects and embroiled Public Works officials, lawmakers and private contractors in corruption allegations.

Mr. Dacanay said the Philippines’ favorable demographics, tariff advantage and strong business process outsourcing sector will keep FDIs on track and could even help attract more investments into the country’s export-oriented industries.

On the other hand, Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the October figures suggest that corporate financing decisions weighed more on foreign investments than political factors.

“Month on month, though, we bounced back simply because September was (at) a five‑year low — so October looked stronger as funding cycles normalized,” he said via Viber. “The flood control scandal added noise, but the data show the bigger driver was corporate financing decisions, not politics.”

10-month slide

Meanwhile, BSP data also showed that FDI net inflows fell by 24.5% to USD 6.179 billion as of October from USD 8.184 billion in the comparable year-ago period.

“Net foreign direct investments declined year on year for the month of October 2025 (-39.8%) and from January-October 2025 (-24.5%) amid external risk factors particularly Trump’s higher tariffs, trade wars (and) protectionist policies that slowed down the US and global economy,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Nonresidents’ investments in equity and investment fund shares amounted to USD 2.11 billion in the 10 months to October, 14.5% lower than the USD 2.468 billion a year earlier.

Investments in equity capital, other than the reinvestment of earnings, slid by 29.8% to USD 1.022 billion during the period from USD 1.456 billion in the prior year.

This as placements dropped by 16.4% year on year to USD 1.599 billion as of October from USD 1.912 billion a year ago. On the other hand, withdrawals climbed 26.5% to USD 577 million from USD 456 million a year ago.

Most equity capital placements in the 10-month period came from Japan, the United States and Singapore.

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

Meanwhile, nonresidents’ reinvestment of earnings increased by 7.6% to USD 1.088 billion as of October from USD 1.011 billion.

However, net investments in debt instruments dropped by 28.8% to USD 4.069 billion in the period ending October from USD 5.717 billion a year ago.

Mr. Ravelas said the BSP’s forecast of USD 7 billion in FDI net inflows by end-2025 remains within reach, especially if investments stabilize in the last two months of the year.

“What will help? Strong capital from Japan, the US, and Singapore, continued investments in manufacturing, retail, and real estate, and clearer governance signals that reassure investors. If we stay focused on stability and reforms, the Philippines can keep pulling in long‑term capital despite the noise,” he added.

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. — Katherine K. Chan, Reporter