BSP: Foreign direct investments drop 40 percent

In August

MANILA, Philippines — The inflow of foreign direct investments (FDI) fell by 40.5 percent to $494 million in August from $830 million in the same month last year, data from the Bangko Sentral ng Pilipinas (BSP) showed.

This was the lowest inflow in two months or since the $376 million in June. It was also 61 percent lower than the one-year high of $1.27 billion in July.

The decline was driven largely by lower investments in debt instruments, which fell by 73.8 percent to $145 million from $553 million in the same month last year. Reinvestments of earnings also dipped slightly by 3.6 percent to $203 million from $210 million.

Meanwhile, equity capital placements surged by 53.2 percent to $158 million from $103 million a year ago, although withdrawals fell sharply by 66.2 percent to $13 million from $37 million. This brought total equity other than reinvested earnings to $146 million, more than double the $66 million posted in August 2024.

According to the BSP, most of the equity capital placements in August came from Japan, with the bulk channeled into the manufacturing sector.

From January to August, net FDI inflow dropped by 22.5 percent to $5.18 billion from $6.69 billion in the same period in 2024.

Equity other than reinvestment of earnings fell by 35.5 percent to $870 million from $1.35 billion. Placements declined by 20.1 percent to $1.36 billion while withdrawals rose by 37.6 percent to $494 million.

“For the first eight months, equity capital placements were sourced primarily from Japan, United States, Singapore and South Korea. Industries that received most of these investments were manufacturing, wholesale and retail trade and real estate,” the BSP said.

Despite the overall slowdown, market analysts say the country’s fundamentals remain supportive of investment inflows.

“FDI performance reflects continued optimism about the Philippines’ long-term growth prospects and macroeconomic stability,” said Jean de Castro, head of fixed income for Manulife Investment Management.

De Castro said that the country’s resilient economic fundamentals signal strong investor sentiment.

“Ongoing reforms, infrastructure investment and integration into major trade agreements further reinforce the Philippines’ appeal as an investment destination,” she said.

She also noted that the Philippines’ resilient gross international reserves and sustained dollar inflows are helping maintain ample foreign exchange liquidity and supporting the bond market.

“These inflows ensure a steady supply of foreign currency, further supporting local liquidity and government securities,” De Castro said. “Even amid global volatility and rising US Treasury yields, Philippine bonds have shown stable yields and resilient demand.”

De Castro added that the overall environment provides “a solid foundation for fixed income strategies as the year ends,” making Philippine government bonds an attractive option for both local and foreign investors.

The central bank expects FDI inflows to hit $7.5 billion this year and $8 billion in 2026.