2025 foreign investments fall 50%

Approved foreign investments in the Philippines plunged by 50.1% year on year to PHP 272.38 billion in 2025, its sharpest fall in five years, the Philippine Statistics Authority (PSA) reported on Thursday.

Preliminary data from the PSA showed that the value of foreign commitments approved by the country’s investment promotion agencies (IPA) in 2025 was lower than PHP 546.19 billion in 2024.

This was the steepest drop in foreign investments since the 71.3% drop recorded during the pandemic in 2020.

By value, this was the lowest amount of approved foreign investments since the PHP 241.89 billion recorded in 2022.

Singapore was the top source of investment pledges for 2025 after committing PHP 92.78 billion, or 34.1% of the total. It was followed by the Netherlands with PHP 35.98 billion (13.2% share) and Japan with PHP 34.03 billion (12.5%).

Analysts attributed the sharp drop in foreign investment pledges to the sluggish investor confidence in the Philippines arising from global trade uncertainties, natural disasters and the flood control corruption scandal.

“In a nutshell, the decline in approved foreign investment pledges in 2025 was driven by a mix of weaker investor confidence due to governance and corruption issues, global economic uncertainties, cautious corporate behavior, and an unusually high base of comparison from the previous year,” said Ser Percival K. Peña-Reyes, director of the Ateneo Center for Economic Research and Development.

Marco Antonio C. Agonia, an economist at the University of Asia and the Pacific, said uncertainty over the US tariffs may have also dissuaded foreign investors from setting up operations in the Philippines.

The United States imposed a 19% tariff on most Philippine goods beginning Aug. 7, 2025.

“Similarly, weaker growth prospects from repeated natural disasters and the flood control scandal may have encouraged foreign companies to scrap or defer their investment plans in the country,” Mr. Agonia said in an e-mail.

The Board of Investments (BoI) approved PHP 150.34 billion worth of investment pledges in 2025, accounting for 55.2% of the total. It was followed by the Philippine Economic Zone Authority (PEZA) with investment pledges worth PHP 107.06 billion (39.3% share), and the Bases Conversion and Development Authority (BCDA) with PHP 7.01 billion (2.6%).

For 2025, about 45% or PHP 122.48 billion of the total approved foreign investments will go to the energy sector, followed by manufacturing with PHP 81.41 billion (29.9% share) and real-estate activities with PHP 26.31 billion (9.7%).

In 2025, Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) cornered around PHP 100.43 billion worth of these investment pledges. Central Luzon will get PHP 70.74 billion while the Bicol Region got PHP 50.76 billion.

Sharp rise in Q4

PSA data also showed foreign investment pledges surged by 79.1% to PHP 103.33 billion in the fourth quarter of 2025, from PHP 57.7 billion in the same period in 2024. This was the fastest growth since the third quarter of 2024 when approved foreign investments soared by 423.4% to PHP 143.74 billion.

“The jump in [fourth-quarter] approved foreign investments may be attributed to base effects. The Q4 2025 reading saw a rebound coming from the low base but is still historically lower than previous Q4 pledge readings,” said Mr. Agonia, noting that pledges fell sharply in the fourth quarter of 2024 over tariff uncertainties.

Mr. Peña-Reyes said agencies may have also “back-loaded” approvals of large investments in the last months of 2025.

“There was sectoral project momentum in strategic areas like energy, IT-BPM, and infrastructure,” he said. “There was relative improvement in sentiment and continued policy support, which encouraged the finalization of deals that had been delayed earlier in the year.”

In the fourth quarter, investment commitments were approved by six IPAs — BoI, PEZA, Subic Bay Metropolitan Authority (SBMA), BoI-Bangsamoro Autonomous Region in Muslim Mindanao, Clark International Airport Corp., and Zamboanga City Special Economic Zone Authority.

The BoI approved foreign pledges worth PHP 66.19 billion accounting for 64.1% of the total, followed by PEZA with PHP 35 billion (or 33.9% share) and SBMA with PHP 1.29 billion worth of commitments (1.2%).

In the fourth quarter, the Netherlands was the biggest source of approved investments with PHP 33.05 billion, accounting for 32% of the total. This was followed by Japan with commitments worth PHP 17.88 billion (17.3%) and Singapore with commitments worth PHP 17.66 billion (17.1% share).

During the October-to-December period, the Authority of the Freeport Area of Bataan, BCDA, Cagayan Economic Zone Authority, Clark Development Corp., Poro Point Management Corp., John Hay Management Corp., and Tourism Infrastructure and Enterprise Zone Authority did not approve any investment pledges.

The energy sector also cornered the largest approved foreign investments with PHP 49.41 billion in the fourth quarter, about 47.8% of the total pledges during the period.

Around 33.6% or PHP 34.68 billion of the approved foreign investments will go into the manufacturing industry, while 4.6% or PHP 4.76 billion worth of pledges will be invested in the information and communication industry.

For the period, 45.3% of the foreign investment commitments worth PHP 46.85 billion will go to projects located in Calabarzon.

Central Luzon cornered PHP 35.36 billion worth of investment commitments while Negros Island Region got PHP 7.79 billion.

Should these foreign commitments materialize, these projects are expected to generate 101,164 jobs, 0.8% lower than 101,966 projected jobs a year earlier.

Meanwhile, PSA data showed combined investment commitments from both foreign and Filipino investors surged by 193.8% to PHP 1.1 trillion in the fourth quarter, from PHP 373.7 billion in the same period in 2024. Filipino investors contributed PHP 994.44 billion, or 90.6% of the total.

In 2025, total investment commitments from foreign and Filipino nationals fell by 1.7% to PHP 1.92 trillion, from PHP 1.96 trillion in the previous year. Investment pledges by Filipinos reached PHP 1.65 trillion last year, accounting for 85.8% of the total.

Mr. Peña-Reyes said there will likely be a “moderate recovery” in foreign investment pledges in the first quarter of 2026.

“This view is supported by project pipelines and sector prospects, but it is still influenced by cautious investor sentiment,” he said.

“For the rest of the year, there could be gradual strengthening if reforms and policy clarity improve, with key sectors attracting sustained interest. Actual FDI (foreign direct investment) flows may lag pledges, but they could trend upward as confidence returns,” he added.

On the other hand, Mr. Agonia said investment pledges may remain subdued for the rest of the year.

“The fallout of a weaker growth outlook from the corruption scandal, its effects on government spending and consumer and investor confidence will likely extend into this year, barring any major improvements to the business environment,” he said.

The PSA data on foreign investment commitments, which may materialize shortly, differ from actual foreign direct investments tracked by the BSP. The central bank’s monitoring goes beyond the projects and includes other items such as reinvested earnings and lending to Philippine units via their debt instruments. — Heather Caitlin P. Mañago, Researcher