FDI inflows rise 21.3% in May

MANILA, Philippines — Foreign direct investment (FDI) inflows to the Philippines posted a double-digit growth in May, on the back of higher debt placements from overseas investors and boosted by manufacturing projects, even as the five-month tally remained well below last year’s level.

Data from the Bangko Sentral ng Pilipinas (BSP) showed net FDI inflows jumped by 21.3 percent to $586 million in May from $483 million in the same month last year. It was the lowest in two months. However, the growth rate marked the fastest pace in seven months.

The May figure was largely driven by an 88.3-percent surge in nonresidents’ net investments in debt instruments to $427 million from $227 million a year ago.

“The uptick in May’s FDI reflects improved investor sentiment due to the country’s solid macroeconomic fundamentals, relatively stable (decelerating) inflation and infrastructure momentum,” John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said.

Rivera also said that moderating global interest rates and an improvement in regional trade also boosted investor confidence.

In May, reinvestment of earnings remained broadly stable at $97 million. However, gains were tempered by a steep 61.4-percent drop in nonresidents’ net equity capital investments, excluding reinvested earnings, which slid to $62 million from $161 million in May 2024.

The central bank said the bulk of equity capital placements in May came from the United States, Japan, Singapore and South Korea. These were channeled mostly into manufacturing, real estate, and electricity, gas, steam and air-conditioning supply.

Despite the rebound in May, the five-month tally remained in the red. From January to May, net FDI inflows reached $3 billion, down by 26.9 percent from $4 billion in the same period last year.

“The year-to-date decline shows that inflows remain sensitive to policy clarity, geopolitical risks and tariff developments,” Rivera said.

If the Philippine economy sustains its 5.4 percent growth average in the first half, Rivera said the country could see modest FDI recovery in the latter part of the year.

“To gain stronger traction, the Philippines needs to accelerate reforms in ease of doing business, investment facilitation and trade diversification to counter headwinds from global uncertainty,” Rivera added.

FDI inflows are generally driven by foreign investors’ long-term prospects on the domestic economy and the country’s investment climate. These flows tend to be volatile due to external factors such as shifts in global risk appetite, changes in monetary policy settings in advanced economies and developments in the international financial markets.

FDI is seen as a key source of capital for the Philippines as it helps generate more jobs, supports infrastructure and industrial development as well as facilitates technology transfer.