FDI net inflows slump to five-year low in 2025

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 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 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 the previous year.

THREE-MONTH LOW DECEMBER
In December, FDI net inflows stood at a hree-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 the $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.

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 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.

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.

For 2026, the central bank sees FDI net inflows reaching $7.5 billion by yearend.