FDIs plunged nearly 40% in Oct ’25 to $642M
Net inflows of foreign direct investments (FDI) in the Philippines slumped once again in October, as global geopolitical tensions and the national corruption scandal continued to take a heavy toll on investor confidence.
Latest preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed that net FDI inflows plunged nearly 40 percent to $642 million in October, from $1.067 billion a year earlier.
The October figure marked the second-sharpest year-on-year contraction in 2025, following the 55-percent drop recorded in February, and was also steeper than the 38.1-percent decline in August.
This brought the 10-month FDI inflows to $6.2 billion, about 25-percent lower than the $8.2 billion recorded in the same period in 2024.
The central bank’s year-end forecast is a $7.5-billion net inflow, putting current figures at around 83 percent of the target.
Month-on-month, however, the October FDI rebounded from September’s pandemic-era low of $320 million. The September figure was the lowest since April 2020’s $314 million.
According to John Paolo Rivera, senior research fellow at the Philippine Institute of Development Studies (PIDS), the October slump was once again due to global and national uncertainties.
“It may be attributed to global uncertainty, tighter financial conditions earlier in the year, and weaker investor confidence amid governance and execution concerns in the country, which likely caused firms to delay or stagger capital inflows,” Rivera said.
The modest rebound in September, meanwhile, was likely only a “partial normalization rather than a clear turnaround.”
Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., echoed the view of normalization but said corporate decisions weighed more than political issues this time.
“The flood‑control scandal added noise, but the data shows the bigger driver was corporate financing decisions, not politics,” Ravelas said.
Japan emerged as the top source of FDIs in October, while financial and insurance corporations were the biggest recipients during the month.
A closer look at the data showed that equity capital investments, a key indicator of new FDIs, rose 10.65 percent to $135 million in October, outpacing capital withdrawals, which fell 17.39 percent to $19 million.
As a result, net equity capital inflows climbed to $117 million, up about 17 percent year-on-year.
Making up the bulk of FDIs were intercompany borrowings between multinational firms and their Philippine subsidiaries, which plunged 50.7 percent to $437 million.
On the positive side, Aris Dacanay, economist at HSBC Global Investment Research, said the Philippines still enjoys an export-based advantage that could help offset political headwinds.
“I do see FDI in export-oriented industries continuing to find its way into the Philippines because, regardless of what is happening in domestic politics, the country still has a tariff advantage over China,” Dacanay said.
However, with the country at a “critical juncture” as it continues to grapple with the flood control corruption scandal that has dented economic growth, investors remain largely in a wait-and-see mode as they assess the government’s policy direction.
