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Foreign direct investments shrink 22% at end-November 2025 on cautious foreign firms
Business
Banking & Finance
Foreign direct investments shrink 22% at end-November 2025 on cautious foreign firms
Foreign direct investments shrink 22% at end-November 2025 on cautious foreign firms
By Derco Rosal
Published Feb 10, 2026 02:30 pm
At A Glance
- Net inflows of foreign direct investment (FDI) in the Philippines contracted to $7.08 billion as of end-November 2025, over a fifth lower than the $9.08 billion in the same period in 2024 due to the reduced borrowings local firms fetched from their foreign counterparts.
Net inflows of brick-and-mortar foreign direct investment (FDI) in the Philippines shrank to $7.08 billion as of end-November 2025, more than a fifth lower than the $9.08 billion recorded during the same period in 2024, as local firms drew fewer borrowings from their foreign counterparts.
At end-November, total net FDI stood at 70.8 percent of the Philippines’ $10-billion full-year target for 2025. It may be recalled that the country attracted a total of $9.44 billion in FDI in 2024.
According to the latest data released by the Bangko Sentral ng Pilipinas (BSP) on Tuesday, Feb. 10, Japan remained the top source of FDIs during the first 11 months of last year, followed by the United States (US) and Singapore.
The financial and insurance activities sector emerged as the largest recipient of investments during the 11-month period, alongside manufacturing, real estate, and wholesale and retail trade.
It bears noting that this contraction trend persisted throughout 2025, with cumulative annual growth remaining negative every month since January. This sharply contrasts with full-year 2024 data, which posted a 5.8-percent increase from 2023.
BSP data showed that the 22.1-percent cumulative drop in 2025 was driven primarily by a more than one-fourth decline in net debt instruments, or intercompany borrowings, which fell to $4.78 billion from $6.51 billion. These account for the bulk of FDI inflows.
Net equity, other than reinvestment of earnings, also contracted sharply to $1.14 billion from $1.49 billion a year earlier.
SM Investments Corp. (SMIC) group economist Robert Dan J. Roces said the pullback in FDI reflects a mix of global caution, weaker offshore demand, and “investors spacing out big commitments rather than abandoning them.”
Roces noted that previous FDI figures were inflated by several large, one-off transactions, adding that the key concern lies in the timing and composition of investments.
“If reinvested earnings stay firm and manufacturing and energy projects move forward, it could be more of timing and base effects than a broader loss of investor confidence, although the latter is a real and present risk,” Roces said.
Reinvestment of earnings was the only FDI component that expanded on a cumulative basis, growing 6.2 percent to $1.15 billion from $1.09 billion a year earlier.
In November alone, net FDI inflows dipped slightly to $897 million, from $900 million during the same month in 2024.
Despite the decline, November marked a stabilization from October, when inflows plunged nearly 40 percent year-on-year to $642 million. Net FDI continued to recover from October’s plunge and September’s merely $320 million.
For Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., the contraction seen as of end-November indicates that “foreign investors turned more cautious” toward the close of 2025, despite November’s monthly spike.
“That mix suggests the Philippines hasn’t lost investor interest—sentiment just became more selective,” Ravelas asserted, noting that the decline likely mirrors lingering global uncertainty, compounded by “domestic policy noise and tougher competition from our Association of Southeast Asian Nations (ASEAN) neighbors.”
To tackle these concerns, the government should “keep reforms credible, reduce uncertainty, and move faster on execution,” said Ravelas. “If the government sustains that clarity, we could turn that November momentum into a broader recovery.”
Meanwhile, Rizal Commercial Banking Corp. (RCBC) chief economist Michael L. Ricafort attributed the decline to political noise, especially in the third quarter of 2025, which resulted in a wait-and-see attitude among some FDIs.
Recall that the flood-control saga first erupted in the second half of 2025, leading to a series of mass protests, a deepening investigation, leadership resignations in Congress, and a Cabinet reshuffle.
FDI refers to cross-border investments in which a nonresident investor owns at least 10 percent of the equity in a local enterprise and may take the form of equity capital, reinvested earnings, or intercompany borrowings.
These figures track actual investment inflows—equity capital, reinvested earnings, and intercompany borrowings—reported in net terms, or placements less withdrawals.