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 bottom yearly FDI level since 2020 or when net inflows slumped to $6.822 billion. Excluding the pandemic period, this was the bottom because the $5.639-billion FDI net inflows in 2015.
The tip-2025 tally was also 17.1% lower than the $9.398 billion in 2024 but exceeded the BSP’s $7-billion estimate for the 12 months.
“For the complete 12 months of 2025, equity capital placements were sourced primarily from Japan, the US, 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 press release released late on Tuesday.
The complete-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 within the Philippines, in accordance with the BSP. The remainder are investments made by nonresident subsidiaries or associates of their resident direct investors or referred to 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 within the prior 12 months.
Nonresidents’ net investments in equity capital, apart from the reinvestment of earnings, rose by 31.4% to $1.324 billion in 2025 from $1.008 billion a 12 months earlier.
This got here whilst equity placements slid by 23.1% to $1.984 billion last 12 months from $2.58 billion in 2024. However, withdrawals plunged by 58% annually to $660 million from $1.572 billion.
However, reinvestment of earnings inched up by 2.5% to $1.198 billion in 2025 from $1.17 billion within the previous 12 months.
John Paolo R. Rivera, a senior research fellow on the Philippine Institute for Development Studies, said local and global uncertainties in addition to tighter competition within the Association of Southeast Asian Nations (ASEAN) region can have softened FDI net inflows last 12 months.
“FDI fell as a consequence of tighter global financial conditions, geopolitical uncertainty, and domestic constraints resembling slower growth, infrastructure delays, and investment climate concerns, alongside stronger competition from other ASEAN economies,” Mr. Rivera said via Viber.
THREE-MONTH LOW IN DECEMBER
In December, FDI net inflows stood at a three-month low of $560 million but was up 31.2% from the $427-million inflows seen in the identical month in 2024.
This was the bottom monthly tally since $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 through the month,” the BSP said.
Yr-end seasonality and postponed investment decisions likely led to the three-month low level in December, SM Investments Corp. Group Economist Robert Dan J. Roces said.
Meanwhile, Mr. Rivera said investors’ cautious stance amid global shocks can have dampened flows toward the top of the 12 months.
“December’s dip likely reflects year-end timing effects, profit repatriation, and cautious investor sentiment amid peso volatility and global uncertainty,” he said.
BSP data showed that investments in equity and investment fund shares greater than doubled (165.3%) to $260 million from $98 million a 12 months earlier.
Net investments in equity capital apart from the reinvestment of earnings also soared by over ninefold (802.8%) to $180 million in December from $20 million within the previous 12 months.
Broken down, equity placements jumped by 29.3% to $243 million in December from $188 million a 12 months 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 identical month in 2024.
Nevertheless, net investments in debt instruments were only $300 million in December, falling by 8.7% from $329 million within the comparable year-ago period.
For 2026, FDI net inflows should rebound despite potential drags from the continued Middle East crisis, Mr. Roces said.
“While the Iran conflict adds uncertainty through higher oil prices and market volatility, we still expect FDI to progressively get better in 2026, particularly in manufacturing, renewable energy, and logistics, as global financial conditions ease and supply-chain diversification continues,” he said.
For 2026, the central bank sees FDI net inflows reaching $7.5 billion by yearend.
FDIs account for foreign investors’ investments in local businesses where they hold no less than a ten% equity capital, in addition to investments by a nonresident subsidiary or associate in its resident direct investor. It might be in the shape of equity capital, reinvestment of earnings or borrowings.
The BSP’s FDI data cover actual investment flows, in comparison with the Philippine Statistics Authority’s foreign investments data which include investment commitments that is probably not fully realized in a given period.