By Katherine K. Chan, Reporter
FOREIGN DIRECT INVESTMENT (FDI) net inflows into the Philippines sank to their lowest level in more than 11 years in May amid still-cautious investor sentiment, Bangko Sentral ng Pilipinas (BSP) data showed.
Based on preliminary BSP data released on Monday, FDI net inflows plunged by 64.7% to $210 million in May from $595 million in the same month last year.
Month on month, it slid by 16% from April’s $250 million, which was the lowest in over a decade. This was the second straight month that inflows declined annually.
The net inflows of FDI in May were the lowest in 11 years and two months or since March 2015, when the country attracted $200 million in FDI.
“The sharp drop in FDI net inflows suggests that foreign investors remain cautious amid elevated geopolitical risks, persistent inflation pressures, subdued economic activity, and peso weakness,” Union Bank of the Philippines (UnionBank) Chief Economist Ruben Carlo O. Asuncion said in a Viber message.
Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the latest FDI decline was due to guarded investor sentiment amid global and domestic headwinds.
“Globally, investors remain cautious amid heightened geopolitical tensions, trade uncertainties, and volatile financial markets, leading many firms to delay or scale back investment decisions,” Mr. Ravelas also said via Viber.
“Domestically, while the Philippines continues to post respectable growth, investors are looking for clearer signals on policy execution, infrastructure rollout, power costs, and the overall ease of doing business,” he added.
However, Mr. Ravelas noted that the latest FDI figures show investors still have confidence in the Philippines but are merely being selective in their investment decisions as uncertainty clouds the investment climate.
“What is noteworthy is that the decline appears to be driven more by investor caution than a loss of confidence in the Philippines,” Mr. Ravelas said. “We are seeing investors become more selective rather than exiting altogether. The country’s strong consumer market, favorable demographics, and ongoing economic reforms remain compelling long-term attractions.”
According to central bank data, investments in equity and investment fund shares rose by 13.6% to $175 million in May from $154 million a year earlier.
Net investments in equity capital other than reinvestment of earnings climbed to $77 million, up 24.5% from $62 million in the prior year.
However, equity placements declined by an annual 19.4% to $87 million from $108 million, while withdrawals plunged by 78.3% to $10 million from $46 million.
Reinvestment of earnings inched up by 5.7% year on year to $98 million during the month from $93 million.
On the other hand, net investment in debt instruments slumped by 92.1% to $35 million in May from $440 million a year ago.
These consisted mainly of intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines, according to the central bank.
FIVE-MONTH INFLOWS
For the first five months of 2026, the country’s average FDI net inflows stood at $2.178 billion, 33.4% lower than the $3.27 billion recorded last year.
“The decline was driven by lower foreign net investments in debt instruments and reinvestment of earnings, which more than offset the increase in net equity capital investments (other than reinvestment of earnings),” the central bank said in a statement.
“This reflected lower intercompany borrowings from foreign direct investors and reduced earnings retained for reinvestment during the period,” it added.
As of May, nonresidents’ net investments in debt instruments of local affiliates declined by 49.5% to $1.253 billion from $2.482 billion in the same period last year.
Investments in equity and investment fund shares, meanwhile, jumped by 17.4% to $925 million in the five months to May from $788 million last year.
Reinvestment of earnings slipped by 9.7% to $383 million in the five-month period from $424 million a year earlier.
However, foreigners’ investments in equity capital other than reinvestment of earnings stood at $541 million, 48.7% higher than the $364 million recorded as of May 2025.
Equity capital placements slipped by 0.6% year on year to $613 million from $617 million, most of which came from Japan, the United States, and Singapore.
“These were channeled largely into the manufacturing, financial and insurance, and real estate industries,” the central bank added.
On the other hand, equity capital withdrawals plunged by 71.5% to $72 million from $253 million previously.
UnionBank’s Mr. Asuncion said the year-to-date decline suggests that the FDI trend reflects a wider deterioration of investor sentiment.
“Since the decline is evident not only in May but also in the year-to-date figures, it points to a broader softening in investment sentiment rather than a temporary fluctuation,” he said.
Mr. Asuncion also noted that global and domestic headwinds will continue to weigh on FDI net inflows in the coming months.
“It is still too early to say that FDI has bottomed out, and inflows could remain weak in the coming months if current global and domestic challenges persist,” he said.
FDIs refer to cross-border investments in which a nonresident investor holds at least 10% equity in a resident enterprise. These may take the form of equity capital, reinvestment of earnings and intercompany borrowings.
The BSP’s FDI data reflect actual investment flows. This differs from the Philippine Statistics Authority’s approved foreign investment data, which represent investment commitments that may not necessarily be realized within the reference period.
For this year, the central bank expects FDI net inflows to decline to $7 billion from the estimated $7.8 billion seen in 2025.
