FDI net inflows fell to 10-month low in Feb. 2025

Net inflows of foreign direct investments (FDI) to the Philippines dropped to a 10-month low in February 2025 amid high base effects and global uncertainties weighing on foreign investors’ sentiments, according to data released by the Bangko Sentral ng Pilipinas (BSP).

BSP data showed FDIs yielded net inflows of $529 million in the second month of the year, down 61.9% from $1.062 billion net inflows in February 2024.

“This decrease was primarily attributed to base effects,” the central bank said.

Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort cited US President Donald Trump’s reciprocal tariffs and other protectionist measures “which could encourage foreign investors to locate in the US to avert higher import tariffs.”

“Continued China-Philippine tensions in disputed waters/territory and other geopolitical risks uncertainties in the region such as on China-Taiwan tensions and with their respective allies could be other risk factors on FDIs, going forward,” Ricafort said.

The central bank defines FDI as an investment by a foreign direct investor in a local enterprise, whose equity capital in the latter is at least 10% or an investment made by a foreign subsidiary in its resident direct investor.

FDI can be in the form of equity capital, reinvestment of earnings, and borrowings.

The BSP's FDI statistics are distinct from the investment data of other government sources as this covers actual investment inflows, as compared with approved foreign investments data published by the Philippine Statistics Authority (PSA) sourced from Investment Promotion Agencies representing investment commitments or pledges which may not necessarily be realized fully, in a given period.

Broken down, the decline in FDI net inflows in February was amid the decrease in foreigners’ net investments in equity capital by 85.9% to $108 million from $764 million year-on-year.

Likewise, non-residents’ net investments in debt instruments and their reinvestment of earnings slipped by 35.4 percent to $348 million from $540 million and 13.1% to $73 million from $84 million, respectively.

Net investments in debt instruments consist mainly of intercompany borrowing and lending between foreign direct investors and their subsidiaries or affiliates in the Philippines.

The BSP said the bulk of the equity capital placements in February came from Japan, the United States, Ireland, and Malaysia.  

“These investments were largely directed towards the manufacturing, financial and insurance, real estate, and information and communication industries,” it said.

The year-to-date   FDI   net   inflows   amounted  to  $1.3   billion,  down 45.2%  from $2.3 -billion net FDI inflows    recorded in January to February 2024. —AOL, GMA Integrated News