The Philippines made no progress in attracting foreign direct investments (FDIs) in 2025, maintaining its sixth-place ranking for another year and failing to capitalize on the investment boom sweeping Southeast Asia.

According to the 2026 World Investment Report by the United Nations Conference on Trade and Development (UNCTAD), the country’s FDI inflows declined by four percent to $9 billion last year from $9.41 billion recorded in 2024.

This drop kept the Philippines behind its regional neighbors, which benefited from a nearly 10 percent aggregate increase in investments. UNCTAD data showed that Southeast Asia’s total FDI inflows rose to $244.17 billion in 2025 from $222.50 billion the previous year.

“The magnitude of the increase varied considerably across countries, and regional growth was driven primarily by a subset of economies rather than being evenly distributed throughout the region,” UNCTAD stated.

Within the region, Singapore remained the largest recipient of FDIs, drawing $150.90 billion—an 11 percent increase from $136.20 billion the prior year.

Despite a 13 percent drop in inflows to $21.44 billion, Indonesia secured the second spot in Southeast Asia. It was followed by Vietnam ($20.35 billion), Thailand ($19.10 billion) and Malaysia ($15.39 billion).

Apart from the Philippines and Indonesia, Myanmar was the only other nation in the region to record a decline, posting a nearly three percent drop to $1.07 billion.

Investment activity across Southeast Asia was largely concentrated in high-value sectors, including semiconductors, electronics, communications, and renewable energy.

Despite the overall growth in FDIs, UNCTAD noted that Southeast Asia was among the regions most affected by supply chain uncertainty last year. Multinational companies frequently adjusted their investment plans against an increasingly volatile international trade environment.

In 2025, this uncertainty was fueled by the reciprocal tariff policy of the United States (US), which imposed a series of new taxes on various foreign-made products, including those from Southeast Asia. Outside of specific exemptions, Philippine exports to the US were subjected to a 19 percent tariff rate.

The Geneva-based trade body expects another US-led geopolitical disruption to shape the global investment environment this year, particularly following the escalation of conflict in the Middle East in late February.

“Downside risks remain significant, including as a result of the conflict in the Middle East. Increases in energy and commodity prices could reverse recent gains in inflation control, delay monetary easing and disproportionately constrain capital-intensive investments,” the report warned.

UNCTAD noted that the compounding effects of geopolitical conflict and volatile trade policies further complicate corporate decision-making, encouraging firms to delay or scale back capital commitments.

“In this context, the fragile growth in international investment observed in 2025 may be difficult to sustain,” the report added.

At the global level, FDI inflows improved by 6 percent to $1.6 trillion in 2025, up from $1.5 trillion in 2024. In Asia, investments reached $644.01 billion last year, a 3 percent increase from $622.90 billion in the previous year.

To ensure investments remain on an upward trajectory, UNCTAD stressed that countries must learn to compete “in a world where capital, technology and industrial capabilities are increasingly concentrated in sectors seen as strategic.”

While Asia will likely continue to be a primary beneficiary of FDIs, UNCTAD emphasized that the extent to which individual economies benefit will depend on their ability to link these inflows with industrial upgrading, job creation, local supplier networks, and broader regional development.

For lagging nations, this means governments cannot rely solely on tax incentives; they must aggressively strengthen investment facilitation, establish reliable energy and logistics systems, upskill their workforces, and deepen regional integration.