Philippines’ FDI net inflows slide to 4-month low in January

NET INFLOWS of foreign direct investments (FDI) slumped to a four-month low in January as geopolitical risks dampened investor sentiment, the Bangko Sentral ng Pilipinas (BSP) reported.

Preliminary data from the BSP showed FDI net inflows fell by 39.2% to $443 million in January from $729 million a year ago.

Month on month, net inflows declined by 20.9% from $560 million in December.

January saw the lowest monthly FDI net inflow since the $316 million in September 2025.

“This suggests that rising geopolitical risks are weighing on investor sentiment,” the BSP said in a statement.

BSP data showed foreign investments in debt instruments dropped by 38.4% to $320 million in January from $519 million a year ago.

FDI in equity and investment fund shares slid by 41.1% to $123 million in January, from $209 million a year ago.

Net equity other than reinvestment of earnings declined by 19.9% to $70 million from $88 million a year ago. Placements dipped by 8.8% to $93 million in January, from $102 million a year ago, while withdrawals jumped by 57% to $22 million in January from $14 million a year ago.

On the other hand, reinvestment of earnings plunged by 56.8% to $53 million in January from $122 million a year ago.

In January, Japan was the main source of FDIs, “with most inflows directed to the manufacturing industry.”

The BSP said equity placements were mainly from Japan, the United States, and South Korea. These were invested mostly in manufacturing, real estate, and wholesale and retail trade sectors.

FDIs account for foreign investors’ investments in local businesses where they hold at least a 10% equity capital, as well as investments by a nonresident subsidiary or associate in its resident direct investor. It can be in the form of equity capital, reinvestment of earnings or borrowings.

The BSP’s FDI data cover actual investment flows, compared to the Philippine Statistics Authority’s foreign investments data which include investment commitments that may not be fully realized in a given period.

Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said that the weaker January FDI “reflects continued investor caution amid elevated geopolitical risks, tight global financial conditions, and uncertainty over the global growth outlook, which appear to have weighed on intercompany funding flows.”

Mr. Asuncion said the current Middle East conflict may affect FDI inflows this year.

“Going forward, the ongoing Middle East tensions add to downside risks for FDI, as they could prolong volatility in energy prices and further dampen investor sentiment, suggesting near‑term inflows may remain uneven,” he said.

The central bank sees FDI net inflows reaching $7.5 billion by yearend, lower than the $7.791 billion net inflows seen in 2025. — Justine Irish D. Tabile