4-month FDI falls 33.4% on weak equity investor appetite
Foreign direct investment into the country resulted in a net inflow of $610 million in April, breaking a two-month decline and marking the highest monthly inflow since January, central bank data released on Thursday showed.
The rebound in investment inflow in April, however, failed to compensate for the total slowdown in FDI inflow during the four-month period to April.
For January to April 2025, net inflows reached $2.311 billion, down 33.4 percent from $3.560 billion in the same four-month period last year, as shown by the Bangko Sentral ng Pilipinas data.
April highlights
Net FDI for April was up 7.1 percent from $570 million a year earlier.
The April rebound was fueled primarily by a 24.3 percent surge in investment in debt instruments — typically intercompany loans — which rose to $522 million from $420 million a year earlier.
Reinvested earnings also saw a slight uptick, rising to $84 million from $82 million.
However, fresh equity capital during the month — often considered a more reliable gauge of long-term investor confidence — plunged 94.1 percent year-on-year, down to just $4 million from $68 million. It was the lowest monthly equity inflow on recent record.
The BSP said most equity placements in April came from Japan, the United States, Singapore, South Korea, and Taiwan. These were channeled largely into manufacturing, financial services, and real estate.
BSP defines FDI as cross-border investments made by foreign entities holding at least 10 percent ownership in a Philippine enterprise. These include equity placements, reinvestments, and intercompany borrowings.
4-Month FDI down 33.4%
For the four months to April, FDI net inflows totaled only $2.311 billion, down 33.4 percent from $3.56 billion recorded in the corresponding four-month period of 2024.
(See table of FDI figures and pie-chart)
Drivers of April rebound
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the rebound in April was supported by structural and monetary tailwinds. Among these were the passage of the CREATE MORE tax reform law and its implementing rules in February, as well as easing interest rates in both the United States and the Philippines since late 2024.
“These developments helped reduce borrowing costs and improved the financing environment, encouraging some recovery in investment sentiment,” Ricafort said. He noted, however, that April’s $610 million inflow still fell short of the $758 million monthly average recorded since the onset of the pandemic.
Ricafort also cited the Philippines’ demographic strengths — including a population of over 114 million, the 12th largest in the world — as a long-term draw for foreign investors, particularly in consumption-driven industries.
Headwinds for 4-month FDI
Yet, external headwinds continued to weigh heavily on the broader FDI picture, as reflected in the four-month FDI figures.
Ricafort flagged the reimposition of higher US import tariffs under President Donald Trump as a key factor behind the cautious stance adopted by many global investors and exporters.
“Trade tensions and rising protectionism could dampen global trade flows and delay expansion decisions,” he said, adding that uncertainty over external demand is forcing firms to reassess production and inventory strategies.
World Bank FDI report
A recent World Bank report said FDI flows into developing economies so far this year showed their lowest levels since 2005.
In 2023, developing countries received just $435 billion in FDI — a figure that reflects growing global barriers to trade and investment.
World Bank Chief Economist Indermit Gill linked the FDI slowdown to poor policy choices, including rising public debt and restrictive regulations.
“Governments have been busy erecting barriers to investment and trade when they should be deliberately taking them down,” he said. With additional report from Irma Isip
