PH foreign investment weakest since 2015

MANILA, Philippines — Foreign direct investment (FDI) flowing into the Philippines fell to its lowest level in more than a decade in May, a sign of growing investor caution as the economy contends with pressures both at home and abroad.

Net FDI inflow totaled $210 million in May, based on data released by the Bangko Sentral ng Pilipinas (BSP). Inflows still outpaced withdrawals, but the figure was 64.7 percent lower than a year earlier — the smallest monthly net inflow since March 2015, when the country logged $200 million.

Five-month tally falls short

The weak May showing brought cumulative net FDI for the first five months of the year to $2.2 billion, down 33.4 percent year-on-year. That’s just 31 percent of the BSP’s full-year projection of $7 billion in net inflow.

READ MORE: Amid economic slowdown, Central Visayas sees growth in foreign investments

Unlike portfolio investments, which can exit at the first sign of trouble, FDI typically reflects longer-term commitments that generate jobs and support industrial growth — which is why government agencies continue pushing to both attract fresh investment and retain the capital already in the country.

Analysts point to global and local drags

“Globally, investors remain cautious amid heightened geopolitical tensions, trade uncertainties, and volatile financial markets, leading many firms to delay or scale back investment decisions,” said Jonathan Ravelas, senior adviser at Reyes Tacandong & Co.

“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.

Equity capital placements — a gauge of new FDI commitments — reached $87 million in May, against $10 million in withdrawals, for a net equity capital inflow of $77 million, a four-month low.

Reinvestment of earnings, which made up the bulk of May’s FDI, rose 5.7 percent to $98 million. Intercompany borrowing between foreign firms and their Philippine subsidiaries, however, plummeted 92.1 percent to just $35 million.

READ: FDIs fell to 4-month low in Jan on geopolitical risks

Structural drags compound weak demand

“This is compounded by structural drags: elevated borrowing costs, the flood-control corruption scandal’s chilling effect on investor confidence and lingering geopolitical uncertainty — all layered on top of the demand-side weakness,” said Leonardo Lanzona, economist at Ateneo de Manila University.

Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, said persistent headwinds would likely keep foreign investors on the sidelines. “While one month does not make a trend, the weakness in FDI suggests that attracting fresh long-term capital remains a challenge in the current environment,” he said.

READ MORE: Foreign investment pledges in Central Visayas slightly improve in Q1 2026

Disclaimer: The comments uploaded on this site do not necessarily represent or reflect the views of management and owner of Cebudailynews. We reserve the right to exclude comments that we deem to be inconsistent with our editorial standards.