QUICK LOOK: January FDI inflows drop 20% as foreign firms cap funding

Foreign direct investment (FDI) inflows into the Philippines dropped by 20 percent year-on-year in January 2025, reaching only $731 million compared to $914 million in the same month last year, the Bangko Sentral ng Pilipinas (BSP) reported.

Insider spotlight:

• FDI net inflows down 20 percent to $731 million in January 2025
• Sharp drop in debt instrument investments by 37.7 percent
• Equity inflows improved with $88 million net capital investment
• Reinvested earnings up 36 percent year-on-year
• Major sources: Japan, US, Singapore, Malaysia
• Top sectors: manufacturing, finance, real estate

The decline was largely driven by a 37.7-percent fall in nonresidents’ net investments in debt instruments, which fell to $519 million from $833 million.

Debt instruments account for a significant portion of intercompany borrowings and lending between foreign investors and their Philippine subsidiaries or affiliates and, as such, are tallied as long term investments by regulators.

Despite the overall decline, equity capital inflows saw improvement. Net equity capital investment (excluding reinvestment of earnings) reversed from a net outflow of $11 million in January 2024 to a net inflow of $88 million in January 2025. Reinvestment of earnings also rose by 36 percent to $125 million.

Major sources of equity capital during the period included Japan, the United States, Singapore, and Malaysia, with investments directed primarily into manufacturing, financial and insurance, and real estate sectors.