It’s falling knives for foreign investments

Let us not dance around the issue of direct foreign investments (FDI).  The Philippines is “kulelat” in the list of where foreign investors wanted to put in their capital, however government authorities here try to massage the numbers.

According to the Philippine Statistics Authority (PSA), approved  foreign investments in the Philippines plunged by 50.1% year on year to P272.38 billion in 2025, its sharpest fall in five years.  The PSA released the figures last Thursday.

Preliminary data from the PSA showed that the value of foreign commitments approved by the country’s investment promotion agencies (IPA) in 2025 was lower than P546.19 billion in 2024.

This is the steepest drop in foreign investments since the 71.3% drop recorded during the pandemic in 2020.

By value, this was the lowest amount of approved foreign investments since the P241.89 billion recorded in 2022.

Singapore was the top source of investment pledges for 2025 after committing P92.78 billion, or 34.1% of the total. It was followed by the Netherlands with P35.98 billion (13.2% share) and Japan with P34.03 billion (12.5%).

Analysts attributed the sharp drop in foreign investment pledges to the sluggish investor confidence in the Philippines arising from global trade uncertainties, natural disasters and the flood control corruption scandal.

Yet again, economists and political analysts blame several factors for the country’s lackluster performance in FDI.

One factor mentioned is the flood control scandal and its concomitant issue of bad governance.

An economist said there is still uncertainty over the US tariffs, and this situation may have also dissuaded foreign investors from setting up operations in the Philippines.

The United States imposed a 19% tariff on most Philippine goods beginning Aug. 7, 2025.  This figure was originally 20 percent, and President Ferdinand Marcos Jr. flew to Washington and begged President Donald Trump for a reduction in tariffs.  He got a one-percent discount, which then Presidential Economic and Investments Adviser Frederick Go hailed as “good for the Philippines.”

No approved pledges

During the October-to-December period, the Authority of the Freeport Area of Bataan, BCDA, Cagayan Economic Zone Authority, Clark Development Corp., Poro Point Management Corp., John Hay Management Corp., and Tourism Infrastructure and Enterprise Zone Authority did not approve any investment pledges.

The Board of Investments (BoI) approved P150.34 billion worth of investment pledges in 2025, accounting for 55.2% of the total. It was followed by the Philippine Economic Zone Authority (PEZA) with investment pledges worth P107.06 billion (39.3% share), and the Bases Conversion and Development Authority (BCDA) with P7.01 billion (2.6%).

For 2025, about 45% or P122.48 billion of the total approved foreign investments will go to the energy sector, followed by manufacturing with P81.41 billion (29.9% share) and real-estate activities with P26.31 billion (9.7%).

In 2025, Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) cornered around P100.43 billion worth of these investment pledges. Central Luzon will get P70.74 billion while the Bicol Region got P50.76 billion.

PSA data also showed foreign investment pledges surged by 79.1% to P103.33 billion in the fourth quarter of 2025, from P57.7 billion in the same period in 2024. This was the fastest growth since the third quarter of 2024 when approved foreign investments soared by 423.4% to P143.74 billion.

But all these are pledges, with little chances of seeing the light of day, other analysts observed.

In the fourth quarter, investment commitments were approved by six IPAs — BoI, PEZA, Subic Bay Metropolitan Authority (SBMA), BoI-Bangsamoro Autonomous Region in Muslim Mindanao, Clark International Airport Corp., and Zamboanga City Special Economic Zone Authority.

The BoI approved foreign pledges worth P66.19 billion accounting for 64.1% of the total, followed by PEZA with P35 billion (or 33.9% share) and SBMA with P1.29 billion worth of commitments (1.2%).

The Netherlands and Japan

In the fourth quarter, the Netherlands was the biggest source of approved investments with P33.05 billion, accounting for 32% of the total. This was followed by Japan with commitments worth P17.88 billion (17.3%) and Singapore with commitments worth P17.66 billion (17.1% share).

The energy sector also cornered the largest approved foreign investments with P49.41 billion in the fourth quarter, about 47.8% of the total pledges during the period.

Around 33.6% or P34.68 billion of the approved foreign investments will go into the manufacturing industry, while 4.6% or P4.76 billion worth of pledges will be invested in the information and communication industry.

For the period, 45.3% of the foreign investment commitments worth P46.85 billion will go to projects located in Calabarzon.

Central Luzon cornered P35.36 billion worth of investment commitments while Negros Island Region got P7.79 billion.

Should these foreign commitments materialize, these projects are expected to generate 101,164 jobs, 0.8% lower than 101,966 projected jobs a year earlier.

Meanwhile, PSA data showed combined investment commitments from both foreign and Filipino investors surged by 193.8% to P1.1 trillion in the fourth quarter, from P373.7 billion in the same period in 2024. Filipino investors contributed P994.44 billion, or 90.6% of the total.

In 2025, total investment commitments from foreign and Filipino nationals fell by 1.7% to P1.92 trillion, from P1.96 trillion in the previous year. Investment pledges by Filipinos reached P1.65 trillion last year, accounting for 85.8% of the total.

The PSA noted that its data on foreign investment commitments, which may or may not happen, differ from actual foreign direct investments tracked by the BSP. The central bank’s monitoring goes beyond the projects and includes other items such as reinvested earnings and lending to Philippine units via their debt instruments.