By Katherine K. Chan
NET INFLOWS of foreign direct investments (FDI) into the Philippines plunged to their lowest monthly level in over five years in September, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.
Based on preliminary central bank data, FDI net inflows fell by 25.8% to $320 million from $432 million a yr ago.
This marked the bottom monthly FDI inflow in greater than five years or for the reason that $313.79 million recorded in April 2020.
Month on month, inflows sank by 37.7% from $514 million in August.
“Foreign direct investments into the Philippines posted net inflows of $320 million in September 2025,” the BSP said in an announcement on Wednesday. “Japan was the highest source of FDIs, while manufacturing was the largest recipient of FDIs in the course of the month.”
Investments in equity and investment fund shares rose by 27.8% to $120 million in September from $94 million in the identical month in 2024.
Net investments in equity capital aside from reinvestment of earnings soared to $35 million, nearly five times (378.2%) the $7 million seen a yr earlier.
Broken down, equity capital placements jumped by an annual 20.8% to $99 million, while withdrawals fell by 14.4% to $64 million.
Nonresidents’ reinvestment of earnings also dipped by 2.1% to $84 million in September from $86 million last yr.
Meanwhile, net investments in debt instruments dropped by 40.7% to $201 million from $338 million a yr prior.
These consisted mainly of intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates within the Philippines, in line with the central bank.
Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said a mix of world and domestic aspects dragged FDI net inflows to an over five-year low.
“Globally, investors remain cautious amid slower growth in major economies and chronic geopolitical uncertainties,” he said in a Viber message.
“Domestically, while reforms like CREATE MORE (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy) and infrastructure programs are positive signals, structural bottlenecks and policy clarity issues proceed to weigh on investor confidence.”
Economic managers have said that the continued flood control controversy that linked government officials, lawmakers and personal contractors to massive corruption in public infrastructure projects weighed on business and investor sentiment.
Meanwhile, Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., also attributed the slump in foreign investments to high borrowing costs.
“September’s FDI slump to a five-year low reflects global uncertainty, high borrowing costs, and lingering policy gaps,” he said in a Viber message.
LOWER NINE-MONTH FDI
For the primary nine months of 2025, FDIs dropped by 22.2% to $5.537 billion from $7.118 billion in the identical period last yr.
This, as investments in equity and investment fund shares stood at $1.905 billion as of September, down by 16.8% from $2.289 billion the previous yr.
Net foreign investments in equity capital, excluding reinvestment of earnings, went down by 33.3% yr on yr to $905 million at end-September from $1.357 billion a yr ago.
Equity capital placements declined by 18.3% to $1.463 billion, while withdrawals rose by 28.7% to $558 million.
Within the nine-month period, placements mostly got here from Japan, the US and Singapore, the central bank said.
“Industries that received most of those investments were manufacturing, wholesale and retail trade, and real estate,” the BSP added.
However, reinvestment of earnings climbed by 7.3% yr on yr to $1 billion by the tip of September from $932 million previously.
BSP data also showed that nonresidents’ net investments in debt instruments of local affiliates declined by 24.8% to $3.632 billion as of September from $4.829 billion within the comparable year-ago period.
Based on the central bank, the entire FDI net inflows within the nine months to September accounted for 1.6% of the country’s gross domestic product.
Mr. Ravelas said meeting the BSP’s $7.5-billion FDI net inflow forecast for 2025 is “possible but tough.”
“With $5.5 billion to this point, hitting BSP’s $7.5-billion goal will need a robust Q4 rebound — possible but tough without fresh reforms,” he said. “[There could be] modest inflows in manufacturing and real estate if confidence improves.”
He added that the local manufacturing and real estate sectors may even see modest gains in foreign investments if investor confidence rebounds.
“For businesses, now’s the time to push clarity and competitiveness to draw capital,” he said.
Meanwhile, Mr. Asuncion noted that the country’s policy implementation and investment climate will determine whether it may sustain improvements in FDI inflows.
“Looking ahead, we expect modest recovery in FDI inflows as reforms gain traction, but sustained improvement will rely on consistent policy execution and a more competitive investment environment,” he said.