Philippine FDI falls 26.5% through April

By Francis Allan L. Angelo

Foreign direct investment in the Philippines fell 26.5% to about USD 2 billion from January through April as overseas companies reduced lending to local affiliates and reinvested less of their earnings.

The four-month total was down from nearly USD 2.7 billion in the same period last year, according to preliminary data released Friday by the Bangko Sentral ng Pilipinas.

In April alone, net inflows dropped nearly 59% to USD 250 million from USD 607 million a year earlier, marking the weakest monthly showing so far in 2026.

The decline largely came from loans and other debt transactions between foreign investors and their Philippine affiliates, which fell about 40% to USD 1.2 billion during the four-month period.

Foreign companies also reinvested about USD 285 million of their local earnings, down 14% from a year earlier.

Those declines offset a more encouraging increase in net equity investment, which climbed by more than half to USD 464 million.

The rise in equity suggests some foreign investors continued to make longer-term commitments to Philippine businesses even as companies became more cautious about extending loans to their local operations.

Fresh equity placements came mainly from Japan, the United States, and Singapore and were directed largely to manufacturing, financial and insurance activities, and real estate.

For ordinary Filipinos, foreign investment matters because it can help finance factories, offices, housing projects, banks, and other businesses that may generate jobs and demand for local suppliers.

The benefits are not automatic, however, because employment and income gains depend on whether the investments lead to new operations, local hiring, and purchases from Philippine companies.

The weaker inflows do not necessarily mean foreign companies are leaving the country because businesses can change how they fund subsidiaries, including shifting between loans, retained profits, and equity.

Still, the January-to-April decline extends a softer trend after full-year FDI fell 17.1% to about USD 7.8 billion in 2025 from USD 9.4 billion in 2024.

The slowdown also came as the Philippine economy grew 2.8% in the first quarter, while gross capital formation, a broad measure of investment spending, declined 3.3%.

Separately, the Philippine Economic Zone Authority approved PHP 109.43 billion in projects from January through April, up about 72% from a year earlier, indicating that more investments could enter the pipeline.

Those approvals are not directly comparable with the central bank’s figures because investment-agency data represent commitments that may be implemented gradually or not fully realized.

The BSP’s FDI figures cover money that has actually entered the country and include equity, reinvested earnings, and loans between related companies, after accounting for withdrawals.

The latest figures remain preliminary and may be revised as the central bank receives more complete company and banking data.