Foreign investments rise despite governance concerns

Foreign direct investments (FDIs) continued to rise month on month in November 2025, according to data from the Bangko Sentral ng Pilipinas (BSP).

The central bank said net foreign inflows into the Philippines reached $897 million in November 2025 — up by roughly $255 million from the previous month, or about 28 percent. This marks the second consecutive monthly increase in FDI inflows, following October’s roughly 50 percent surge from September.

The BSP said South Korea was the leading source of FDIs, with most inflows directed toward the manufacturing sector 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.

The monthly uptick in FDIs since September last year coincides with the passage of Republic Act No. 12252, or the amended Investors’ Lease Act, signed in September 2025. The law allows foreign investors to lease private land in the Philippines for up to 99 years, replacing the previous 75-year limit. While the law only took effect last month, its passage appears to have attracted increased investment interest from foreign entities.

However, FDIs for the first 11 months of 2025 remained subdued compared with 2024 amid governance concerns. Net inflows totaled approximately $7.1 billion during the period, down by about $2 billion — roughly P117 billion at current exchange rates — from 2024, indicating lingering investor apprehension as the flood control infrastructure controversy continues to affect sentiment.

Despite the year-on-year decline, the January–November 2025 figure remains within the BSP’s earlier projection of FDIs reaching $7 billion by the end of 2025.

In a 26 December forecast, the BSP said “cautious market sentiment and heightened global financial volatility” weighed on investment flows. Still, the central bank noted that recent policy measures — including the 99-year lease reform, the CREATE MORE Act, the Capital Markets Efficiency Promotion Act (CMEPA), and the Konektadong Pinoy Act — could support modest FDI growth over the medium term.

Meanwhile, former Finance Undersecretary Joel Valdes said successful investigations into corruption allegations are critical to restoring investor confidence.

“As we speak, international and domestic investors are waiting for the results of investigations into corruption cases,” he said in an upcoming episode of the DAILY TRIBUNE program Straight Talk.

“So long as those remain unresolved, the next 12 to 18 months will not be favorable.”

Valdes said the country is currently facing a “credibility leakage problem” among both foreign and domestic investors, noting that political instability can paralyze investment decisions while excessive bureaucracy discourages long-term capital commitments.

“Investors are not expecting a perfect government,” he said. “They are expecting a predictable government.”

Surveys conducted by the BSP show that both business and consumer confidence remain subdued amid corruption controversies. BSP Deputy Governor Zeno Abenoja said in Dumaguete City last week that the central bank plans to conduct business and consumer confidence surveys monthly beginning this year to better capture sentiment and guide monetary policymaking.

“Investors hate unpredictability. Confidence among consumers also worsens when uncertainty dominates. People stop spending on capital goods because they cannot ascertain what the near future holds,” Valdes added.