Japan-Led FDI Inflows Hit $610M in April

By Francis Allan L. Angelo

Foreign direct investment (FDI) net inflows into the Philippines reached US$610 million (approximately PHP35.7 billion) in April 2025, reflecting a 7.1 percent increase year-on-year, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP).

The uptick was primarily driven by stronger intercompany borrowings, with nonresidents’ net investments in debt instruments rising 24.3 percent to US$522 million from US$420 million in April 2024.

Reinvestment of earnings also rose modestly by 3.3 percent to US$84 million from US$82 million during the same period.

However, nonresidents’ equity capital placements, excluding reinvested earnings, plummeted by 94.1 percent to US$4 million from US$68 million, underscoring cautious investor sentiment in direct equity participation.

Japan emerged as the leading source of equity capital, followed by the United States, Singapore, South Korea, and Taiwan, the BSP noted.

The manufacturing sector remained the top recipient of FDI, with additional flows directed to the financial and insurance, and real estate sectors.

Despite the April gains, total FDI net inflows for the January–April 2025 period declined 33.4 percent to US$2.4 billion from US$3.6 billion in the same period last year.

The BSP attributed the year-to-date drop to global economic uncertainties and cautious capital deployment by multinational firms amid high interest rates and regional supply chain recalibrations.

FDI data reported by the BSP reflect actual investment flows, unlike investment commitment figures from the Philippine Statistics Authority, which are sourced from investment promotion agencies and are not guaranteed to materialize.

Under the Balance of Payments and International Investment Position Manual (BPM6), BSP’s FDI statistics count investments where foreign ownership is at least 10 percent, and include equity capital, reinvested earnings, and intercompany debt.

FDI in the Philippines remains a key driver of job creation, export growth, and technology transfer, especially in sectors aligned with government priorities such as advanced manufacturing and financial technology.

While equity capital dropped in April, BSP officials expect investment appetite to recover gradually in the second half of 2025, helped by easing inflation, infrastructure upgrades, and ongoing policy reforms.