FDI inflow in September lowest in 5 years

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December 11, 2025 | 12:00am

MANILA, Philippines — Foreign direct investments (FDI) into the Philippines fell to a five-year low in September as foreign firms held back expansion plans amid persistent global uncertainty and weaker domestic sentiment.

Data from the Bangko Sentral Pilipinas (BSP) showed that net inflow fell by 25.8 percent to $320 million in September from $432 million in the same month last year.

The September print marked the weakest level since the $314-million figure in April 2020, at the height of the COVID-19 pandemic.

Reyes Tacandong & Co. senior adviser Jonathan Ravelas said the month’s performance captures the difficult investment environment faced by emerging markets.

“September’s FDI slump to a five-year low reflects global uncertainty, high borrowing costs and lingering policy gaps,” Ravelas said.

In the coming months, Ravelas expects investment flows to remain moderate unless confidence improves.

“Modest inflows in manufacturing and real estate if confidence improves. For businesses, now’s the time to push clarity and competitiveness to attract capital,” he said.

Based on the data, the decline in FDI net inflow reflected the decrease in non-residents’ net investments in debt instruments and net investments in equity capital.

Investments in debt instruments, consisting mainly of inter-company borrowings between foreign direct investors and their subsidiaries or affiliates in the Philippines, plunged by 40 percent to $201 million in September from $338 million a year ago.

“Japan was the top source of FDIs, while manufacturing was the biggest recipient of FDIs during the month,” the central bank said.

For the nine-month period, net FDI inflow declined by 22.2 percent to $5.54 billion from a year-ago level of $7.12 billion.

John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said the drop is also rooted in country-specific developments.

“While global uncertainty plays a role, the bigger drag comes from domestic developments due to the corruption scandal that stalled government spending, weaker-than-expected economic growth and the resulting dip in investor confidence,” Rivera said.

These factors weighed on investor sentiment among foreign firms, especially those who are assessing long-term projects in sectors such as manufacturing, infrastructure and services.

Rivera said the peso’s volatility against the dollar and delays in project approvals added to the cautious sentiment.

He said the downtrend signals the need for clearer commitment from policymakers.

“In short, the decline signals that investors are waiting for clearer governance signals, more stable policy execution and stronger economic momentum before committing fresh capital,” Rivera added.

With the year’s final quarter underway, economists said the government would need to restore investor confidence to support a rebound in FDI inflow.

The BSP expects FDI net inflow at $7.5 billion this year and $8 billion in 2026.