It can be said that 2025 is indeed a very disappointing year for the Philippines as it attracted only $7.79 billion in terms of net inflows of foreign direct investments (FDI), according to a news report by the Manila Bulletin. The said figure is a drop of more than 17% compared with 2024 and it is recalled that the flood control corruption scandal of 2025 negatively affected the nation.
To put things in perspective, posted below is an excerpt from the news report of the Manila Bulletin. Some parts in boldface…
Net inflows of foreign direct investment (FDI) into the Philippines plunged to their lowest level in a decade—excluding the pandemic slump—as investors stepped on the brakes on injecting funds into the country.
The latest data from the Bangko Sentral ng Pilipinas (BSP) released on Tuesday night, March 10, showed net inflows of FDI stood at $7.79 billion for the full year of 2025, dropping 17.1 percent from the $9.4 billion recorded in 2024.
It bears noting that the 2025 performance marks a significant downturn, as full-year FDI was the lowest since the 2020 pandemic level of $6.82 billion.
Excluding the pandemic period, 2025 net FDI represents the lowest level in a decade since the $5.64 billion recorded in 2015. This contraction was a consistent trend throughout 2025, with cumulative annual growth remaining negative every month since January.
On a positive note, the final figure exceeded the country’s $7-billion full-year target.
According to the BSP, the overall decline in investments was largely driven by net debt instruments, or intercompany borrowings, which shrank by 27 percent to $5.27 billion from $7.22 billion in 2024.
Meanwhile, net equity capital, other than reinvestment of earnings, grew by 31.4 percent to $1.32 billion from $1.01 billion the previous year. Reinvestment of earnings also saw a modest expansion of 2.5 percent, reaching $1.2 billion.
For the full year, equity capital placements were primarily sourced from Japan, the United States (US), Singapore, and South Korea.
Investments were largely channeled into financial and insurance activities, manufacturing, and wholesale and retail trade.
In December 2025 alone, net inflows were recorded at $560 million, marking the lowest in three months since September 2025 at $316 million.
Robert Dan Roces, group economist at SM Investments Corp. (SMIC), said investors delayed their investments, particularly in December. He added that softer inflows likely reflect seasonality.
Looking ahead, Roces believes the ongoing military conflict in the Middle East could add a layer of uncertainty, triggering market volatility. Still, he sees a gradual rebound in 2026 on the back of improving global financial conditions.
“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 (RE), and logistics, as global financial conditions ease and supply-chain diversification continues,” Roces said.
Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the Philippines will be able to rebound strongly this year with foreign investors?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
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