By Katherine K. chan, reporter
The net inflow of foreign direct investment (FDI) into the Philippines fell to $7.791 billion in 2025, its lowest level in five years, preliminary Bangko Sentral ng Pilipinas (BSP) data shows.
This was the lowest annual FDI level since 2020 or so when net inflows fell to $6.822 billion. Excluding the pandemic period, this was the lowest since the $5.639 billion FDI net inflow in 2015.
The tally at the end of 2025 was also 17.1% below the $9.398 billion in 2024, but higher than the BSP's $7-billion estimate for the year.
“For the full year to 2025, equity capital placements were mainly sourced from Japan, the United States, Singapore and South Korea, and largely deployed in the manufacturing, wholesale and retail trade, and financial and insurance industries,” the central bank said in a statement issued late Tuesday.
The full-year level declined to $5.269 billion in 2024 from $7.221 billion due to a 27% year-on-year decline in net investment in debt instruments.
According to the BSP, these primarily involve intercompany lending or borrowings between foreign direct investors and their subsidiaries or affiliates in the Philippines. The remainder are investments made by non-resident subsidiaries or affiliates into their resident direct investors, or known as reverse investments.
Meanwhile, investment in equity and investment fund shares is expected to rise 15.9% to $2.523 billion in 2025 from $2.177 billion last year.
Net investment by non-residents in equity capital, excluding reinvestment of earnings, rose 31.4% to $1.324 billion in 2025, from $1.008 billion a year earlier.
This came as equity placements declined 23.1% to $1.984 billion in 2024 from $2.58 billion last year. Withdrawals, on the other hand, fell 58% year-on-year to $660 million from $1.572 billion.
Reinvestment of earnings, on the other hand, is expected to increase by 2.5% to $1.198 billion in 2025, from $1.17 billion last year.
three month low december
In December, FDI net inflows were at a three-month low of $560 million, but were 31.2% higher than the $427 million inflows seen in the same month in 2024.
That was the lowest monthly figure since $316 million in September.
Month-on-month, there was a 37.4% decline from $894 million in November.
“Japan was the leading source of FDI, with the majority of flows directed to financial and insurance activities during the month,” the BSP said.
Investments in equity and investment fund shares more than doubled (165.3%) to $260 million from $98 million a year earlier, BSP data showed.
Apart from reinvestment of earnings, net investment in equity capital also increased nine times (802.8%) to $180 million in December from $20 million last year.
Broken down, equity placements in December rose 29.3% to $243 million from $188 million a year earlier, while withdrawals declined 61.9% to $64 million from $168 million.
Meanwhile, reinvestment of earnings in 2024 rose 2.7% to $80 million from $78 million in the same month.
However, net investment in debt instruments in December was only $300 million, down 8.7% from $329 million in the comparable period last year.
FDI accounts for investments by foreign investors in local businesses where they hold at least 10% of the equity capital, as well as investments by a non-resident subsidiary or affiliate of its resident direct investor. This may be in the form of equity capital, reinvestment of earnings or borrowing.
The BSP's FDI data covers actual investment flows, compared to the Philippine Statistics Authority's foreign investment data, which includes investment commitments that may not be fully realized in a given period.
For 2026, the central bank expects FDI net inflows to reach $7.5 billion by the end of the year.