NET foreign direct investments (FDI) slumped to a five-year low last year, the Bangko Sentral ng Pilipinas (BSP) reported late Tuesday.
Net inflows totaled $7.79 billion in 2025, 17.1 percent lower than the $9.4 billion recorded a year earlier. It was the smallest recorded since 2020’s $6.82 billion but still better than the $7.0 billion expected by the central bank.
Equity capital placements rose 31.4 percent to $1.32 billion from $1.01 billion and reinvestments of earnings also increased, by 2.5 percent to $1.2 billion from $1.17 billion.
Net investments in debt instruments, however, plunged by 27 percent to $5.3 billion from $7.2 billion a year earlier.
The January-December placements originated mostly from Japan, the United States, Singapore and South Korea, the BSP said, with the top recipient sectors being manufacturing, wholesale and retail trade, and financial and insurance industries.
SMIC economist Robert Dan Roces said that the softer inflows “likely reflect year-end seasonality and deferred investment decisions.”
“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 added.
In December alone, net inflows totaled $560 million, up 31.2 percent from the $427 million recorded 12 months earlier. It fell, however, from $894 million in November.
Equity capital placements, in particular, surged by 802.8 percent to $180 million from just $20 million in December 2024 and were also higher than the $122 million a month earlier.
Reinvestments of earnings rose 2.7 percent to $80 million from $78 million a year earlier.
Net investments in debt instruments, however, dropped by 8.7 percent to $300 million from $329 million.
Philippine Institute for Development Studies Senior Fellow John Paolo Rivera said an FDI recovery would depend on “improved investor confidence, stronger infrastructure execution and reforms that enhance ease of doing business.”
“Manufacturing diversification, digital economy investments, and RE (renewable energy) projects could drive inflows if global conditions stabilize,” he added.
The BSP’s FDI figures differ from those of other government agencies in that these cover actual investments. The Philippine Statistics Authority, in contrast, publishes approved foreign investments — commitments that may not be realized.
The central bank expects net FDI to rebound to $7.5 billion this year.
