FDIs up 50% in October amid weak investor sentiment

Foreign direct investments (FDIs) improved to $642 million in October 2025, up 50 percent from the previous month, according to the latest data from the Bangko Sentral ng Pilipinas (BSP).

Despite the month-on-month improvement, the figure still reflects subdued foreign investor sentiment in the wake of the flood control scandal, with FDIs down 39.8 percent from the same month in 2024.

The central bank said net FDI inflows reached $6.2 billion in January to October 2025, representing a 19.5 percent decline from the same period in 2024. Japan was the top source of FDIs, while corporations engaged in financial and insurance activities were the largest recipients during the month.

FDIs refer to investments made by foreign companies or individuals in businesses, factories, or projects located in another country, with the intention of long-term control or significant influence, rather than short-term financial returns. In the Philippines, FDIs typically take the form of manufacturing plants, infrastructure projects, BPO facilities, renewable energy investments, and joint ventures with local firms.

Net FDI inflows in the Philippines accounted for about 1.93 percent of gross domestic product (GDP) in 2024, according to World Bank data — one of the lowest FDI-to-GDP ratios in the region, indicating relatively limited reliance on international investment.

In a statement dated 26 December, the BSP said the country’s balance of payments (BOP)—a comprehensive summary of the Philippines’ financial and economic transactions with the rest of the world—is expected to slip into deficit in 2025 and 2026 amid sustained domestic and global headwinds.

“This reversal largely reflects a continued current account shortfall arising from a sustained trade-in-goods gap and weaker services receipts. Foreign direct investments and external loans have also moderated amid lingering global policy uncertainty,” the BSP said.

FDI inflows have taken a sharp hit since July, when allegations of ghost flood control projects rose to national prominence. Central bank data show inflows plunging to $320 million in September from $1.3 billion in July—representing a roughly 75 percent drop following the onset of the ‘floodgate’ scandal.

The BSP said “cautious market sentiment and heightened global financial volatility” have weighed on investment flows. Still, it noted that recent policy measures — including the CREATE MORE Act, the Capital Markets Efficiency Promotion Act (CMEPA), and the Konektadong Pinoy Act—could support modest FDI gains over the medium term. The central bank projects FDIs to reach $7 billion by the end of 2025.

For the first ten months of 2025, equity capital placements were sourced mainly from Japan, the United States, and Singapore. The manufacturing, wholesale and retail trade, and real estate sectors received the bulk of these investments.