FDI inflows rise

MANILA, Philippines —  Foreign direct investments (FDI) to the Philippines inched up in April, buoyed by continued investor interest in manufacturing and strong inflows from Japan, even as the year-to-date tally remained significantly lower than last year’s level.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that net FDI inflows rose by seven percent to $610 million in April from $570 million a year ago, driven mainly by higher lending by parent firms to their local affiliates.

FDI refers to the investment made by a person or company based in one country into a business or enterprise located in another country, typically to establish lasting interest or control.

Unlike portfolio investments, which involve only the buying of stocks or bonds, FDI usually involves acquiring assets, setting up operations or expanding existing businesses.

Net investments in debt instruments jumped by 24 percent to $522 million from $420 million in the same month last year. Reinvestment of earnings also grew by three percent to $84 million.

However, fresh equity placements plunged by 94 percent to $4 million from $68 million in April 2024, reflecting continued investor caution amid global uncertainties.

Despite the steep drop, equity capital still flowed in from traditional sources such as Japan, the United States, Singapore, South Korea and Taiwan. These investments went largely into manufacturing, financial and insurance as well as real estate.

From January to April, total net FDI inflows fell by 33 percent to $2.4 billion from $3.6 billion in the same period last year.

John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said the increase in FDI in April suggests renewed investor interest in the Philippines as a production hub amid global supply chain shifts.

“Strategic sectors like electronics and auto parts are attracting capital as firms diversify away from China and seek cost-effective alternatives in Southeast Asia,” Rivera said.

However, the recent imposition of a 20-percent US tariff on Philippine exports could dampen future FDI momentum especially in export-oriented industries.

“Investors may reassess the Philippines’ competitiveness compared to peers like Vietnam or Thailand, which may negotiate more favorable trade terms,” Rivera said.

“To mitigate this, the national government must act quickly to engage in trade diplomacy with the US, support affected sectors and reinforce the country’s attractiveness through policy stability, incentives and logistics improvements,” he added.

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