Manila: The Bangko Sentral ng Pilipinas (BSP) has reported that foreign direct investments (FDI) recorded net inflows of USD560 million in December of last year, marking an increase from the USD427 million recorded in the same month in 2024.

According to Philippines News Agency, data released late Tuesday revealed that Japan emerged as the largest contributor to the FDI, with a significant portion of the inflows being directed toward financial and insurance activities. FDIs encompass investments by a non-resident direct investor in a resident enterprise, where the equity capital in the latter is at least 10 percent, as well as investments made by a non-resident subsidiary or associate in its resident direct investor. These investments can take the form of equity capital, reinvestment of earnings, and borrowings.

For the entire year spanning January to December 2025, FDI net inflows decreased to USD7.8 billion from USD9.4 billion in the preceding year. Equity capital placements primarily originated from Japan, the United States, Singapore, and South Korea. The BSP indicated that these investments were largely channeled into the manufacturing, wholesale and retail trade, and financial and insurance sectors.

Michael Ricafort, chief economist at Rizal Commercial Banking Corporation, attributed the decline in FDIs last year to political noise, which led to a cautious stance among some investors. He noted, "For the coming months, improved governance standards and reforms would help improve international investor confidence and sentiment, including for FDIs."