Net inflows of brick-and-mortar foreign direct investments (FDI) in the Philippines fell to $443 million in January from $729 million a year ago, as rising geopolitical risks weighed on investor sentiment at the start of the year.

This marks the lowest level in four months since the $316 million recorded in September last year.

The latest preliminary data from the Bangko Sentral ng Pilipinas (BSP) released on Friday, April 10, showed that FDI inflows last January dropped by 39.2 percent year-on-year. On a month-on-month basis, net FDI declined by over a fifth from December 2025’s $560 million.

“This suggests that rising geopolitical risks are weighing on investor sentiment,” the BSP said in a statement, implying that multinational companies (MNCs) were anticipating that uncertainties would linger early this year.

Foreign direct investors reduced the value of net debt instruments, or intercompany borrowings, by 38.4 percent to $320 million during the month, compared to $519 million a year ago.

Japan was the primary source of equity capital placements in January, followed by the United States (US) and South Korea. Most of these investments were channeled into industries such as manufacturing, real estate, as well as wholesale and retail trade.

Recall that net inflows of FDI into the Philippines plunged to $7.79 billion in 2025, their lowest annual figure in a decade—excluding the pandemic slump—as investors stepped on the brakes on injecting funds into the country. This dropped by over 17 percent from the $9.4 billion recorded in 2024.

FDI refers to cross-border investments where a nonresident investor owns at least 10 percent of equity in a local enterprise and may take the form of equity capital, reinvested earnings, or intercompany borrowings.

Union Bank of the Philippines (UnionBank) chief economist Ruben Carlo O. Asuncion said the weaker inflows at the onset of the year “likely reflect continued investor caution amid elevated geopolitical risks, tight global financial conditions, and uncertainty over the global growth outlook, which appear to have weighed on intercompany funding flows.”

“Going forward, the ongoing Middle East tensions add to downside risks for FDI, as they could prolong volatility in energy prices and further dampen investor sentiment, suggesting near-term inflows may remain uneven,” Asuncion warned.