NET foreign direct investments (FDI) inflows have fallen by double digits both in August 2025 and in the first eight months of the year due to a mix of trade uncertainties and local political noise that weighed on investor sentiment.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed FDI net inflows plunged by 40.5 percent to $494 million in August 2025 from $830 million in the same month a year ago.
During the month, most of the net FDIs came from Japan, with manufacturing as the leading recipient.
Broken down, nonresidents’ net investments in debt instruments plummeted by 73.8 percent year-on-year to $145 million in August 2025 from $553 million.
Net investments in debt instruments consist mainly of intercompany borrowing and lending between foreign direct investors and their subsidiaries or affiliates in the Philippines.
The remaining portion of net investments in debt instruments pertains to investments made by nonresident subsidiaries/associates in their resident direct investors, such as reverse investment.
Reinvestment of earnings also dipped by 3.6 percent year-on-year to $203 million in August 2025 from $210 million.
Meanwhile, nonresidents’ net investments in equity capital rose by 121 percent year-on-year to $146 million from $66 million.
Jan-Aug inflows down 22.5%
FROM January to August this year, FDI net inflows declined by 22.5 percent to $5.2 billion from $6.7 billion during the eight-month period last year.
The central bank said that equity capital placements were sourced primarily from Japan, United States, Singapore, and South Korea for the first eight months of the year.
Industries that received most of these investments were manufacturing, wholesale and retail trade and real estate, the BSP added.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corporation, traced the drop in FDIs to the mix of trade uncertainties stemming from US tariffs and protectionist policies, recent local political noise affecting investor confidence, and disruptions caused by typhoons in recent months.
Ricafort said higher US import tariffs and trade wars led to a wait-and-see stance on global investments and for some manufacturers and exporters in terms of their production and capacity.
Some local political noises, including geopolitical risks such as the China-Philippine tensions in disputed waters, ‘could weigh on market and investor sentiment until anti-corruption measures/reforms are taken seriously, going forward,’ Ricafort added.
FDI includes investment by a nonresident direct investor in a resident enterprise, where the equity capital in the latter is at least 10 percent. It also includes investments made by a nonresident subsidiary or associate in its resident direct investor.
FDI can be in the form of equity capital, reinvestment of earnings, and borrowings.