Philippine FDI slips to USD 443 million

Foreign direct investments, or FDIs, into the Philippines posted net inflows of USD 443 million in January 2026, down from USD 729 million in January 2025, according to the Bangko Sentral ng Pilipinas, signaling that rising geopolitical risks may be dampening investor sentiment.

FDI refers to long-term investments made by foreign firms or individuals in local businesses, usually with at least a 10 percent ownership stake, while net inflows mean the money that entered the country after deducting withdrawals.

The BSP said Japan was the leading source of FDI in January, with most inflows going to manufacturing, a sector widely tracked because it tends to generate jobs, exports, and supply-chain activity.

Equity capital placements, which refer to fresh foreign money invested directly into Philippine companies, were sourced mainly from Japan, the United States, and South Korea.

Those equity placements were channeled largely into manufacturing, real estate, and wholesale and retail trade, indicating that foreign investors continued to favor sectors tied to production, property, and domestic commerce.

BSP data on page 2 of the press release showed that total nonresident investments in the Philippines, recorded as net incurrence of liabilities, fell to USD 443 million in January 2026 from USD 729 million a year earlier.

Within that total, equity and investment fund shares stood at USD 123 million in January 2026, down from USD 209 million in January 2025.

Net equity other than reinvestment of earnings, which measures fresh placements minus withdrawals, declined to USD 70 million from USD 88 million.

Gross equity capital placements slipped to USD 93 million in January 2026 from USD 102 million in January 2025.

Equity capital withdrawals rose to USD 22 million from USD 14 million, adding to the softer headline figure for the month.

Reinvestment of earnings, which means profits kept in Philippine operations instead of being sent back abroad, dropped to USD 53 million from USD 122 million.

Net debt instruments, which mainly cover intercompany borrowing and lending between foreign parent firms and their Philippine subsidiaries or affiliates, also fell to USD 320 million from USD 519 million.

The BSP compiles its FDI statistics using the Balance of Payments and International Investment Position Manual, 6th Edition, or BPM6, an international standard used by central banks to classify cross-border investments and financial flows.

Under that framework, FDI includes equity capital, reinvestment of earnings, and borrowings, provided the foreign investor has at least a 10 percent stake in the resident enterprise.

The central bank also stressed that its FDI data differ from investment figures released by other government agencies because BSP numbers measure actual inflows, while approved foreign investment data published by the Philippine Statistics Authority through investment promotion agencies reflect commitments that may not be realized within the same period.

The BSP added that its figures are presented in net terms, meaning equity placements are reduced by withdrawals, while PSA-approved foreign investment data do not deduct equity withdrawals.

BSP data indicated that annual net FDI reached USD 11.983 billion in 2021, USD 9.492 billion in 2022, USD 8.925 billion in 2023, USD 9.398 billion in 2024, and USD 7.791 billion in 2025.

The year-on-year decline in January suggests that foreign investors turned more cautious at the start of 2026, even as the Philippines continued to attract capital into core sectors such as manufacturing and property.

For the Philippines, FDI is closely watched because it can help finance factories, offices, logistics networks, and other productive assets that support employment and economic growth over the longer term.