FDI inflows plunge to 11-year low in May

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August 11, 2026 | 12:00am

MANILA, Philippines — Foreign direct investment (FDI) net inflows into the Philippines plunged by 65 percent in May to their lowest level in more than 11 years, weighed down by a sharp drop in intercompany borrowings from foreign investors.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed FDI net inflows fell by 64.7 percent to $210 million in May from $595 million in the same month last year.

The May figure was also 16 percent lower than the $250 million recorded in April and marked the smallest monthly inflow since the $200 million posted in March 2015.

The steep annual decline was driven almost entirely by a collapse in net investments in debt instruments, which mainly represent borrowings and lending between foreign direct investors and their Philippine subsidiaries or affiliates.

Net debt investments sank by 92.1 percent to just $35 million in May from $440 million a year earlier, accounting for more than the overall decline in FDI during the month. This offset improvements in the other two major components of FDI.

Foreign investors’ net equity capital placements rose by 24.5 percent to $77 million from $62 million. Reinvestment of earnings likewise increased by 5.7 percent to $98 million from $93 million.

The increase in net equity investment, however, reflected lower withdrawals rather than stronger fresh placements. Gross equity placements declined by about 19 percent to $87 million from $108 million, while withdrawals dropped sharply to $10 million from $46 million.

For the first five months, FDI net inflows reached $2.18 billion, down by 33.4 percent from $3.27 billion in the same period last year.

The BSP said the January-to-May decline was driven by lower net investments in debt instruments and reinvestment of earnings, which more than offset the increase in net equity capital investments.

“This reflected lower intercompany borrowings from foreign direct investors and reduced earnings retained for reinvestment during the period,” the BSP said.

Net investments in debt instruments fell by 49.5 percent to $1.25 billion in the five-month period from $2.48 billion a year ago. Reinvestment of earnings also slipped by 9.7 percent to $383 million from $424 million.

In contrast, net equity capital investments surged by 48.7 percent to $541 million from $364 million.

The BSP said equity capital placements during the first five months came mainly from Japan, the United States and Singapore. These investments were directed largely toward manufacturing, financial and insurance activities and real estate.

The BSP’s FDI figures measure actual cross-border investment flows and are distinct from foreign investment approvals reported by investment promotion agencies, which represent commitments that may not necessarily materialize within the reporting period.

RCBC chief economist Michael Ricafort said the decline in FDI reflected a combination of geopolitical and domestic uncertainties that have weighed on investment appetite.

He also said the weakness in foreign investment was also consistent with the slowdown in overall investment and economic growth in the second quarter.