By Heather Caitlin P. Mañago
It has been reported that foreign investment in the Philippines has dropped significantly 50.1% year-on-year to P272.38 billion in 2025, its biggest fall in five years, the Philippine Statistics Authority (PSA) reported on Thursday.
Preliminary data from the PSA showed that the amount of foreign commitments approved by the country’s investment promotion agency (IPA) in 2025 was less than P546.19 billion in 2024.
This was the biggest drop in foreign investment since the 71.3% drop recorded during the violence in 2020.
By value, this was the lowest amount of approved foreign investment 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%) and Japan with P34.03 billion (12.5%).
Analysts attributed the sharp drop in foreign investment pledges to sluggish investor confidence in the Philippines caused by global trade uncertainty, natural disasters and corruption in flood control.
“In short, the decline in foreign investment pledges approved in 2025 was fueled by a combination of weak investor confidence due to governance and corruption problems, global economic uncertainty, cautious corporate behavior, and an unusually high base of comparison from last year,” said Ser Percival K. Peña-Reyes, director of the Atenenomic Research Center for Development and Development.
Marco Antonio C. Agonia, an economist at the University of Asia and the Pacific, said uncertainty over US tariffs may also deter foreign investors from setting up operations in the Philippines.
The United States imposed a 19% tariff on most Philippine goods effective Aug. 7, 2025.
“Similarly, the prospect of weak growth resulting from repeated natural disasters and the scandal of flood control may have encouraged foreign companies to abandon or postpone their investment plans in the country,” Mr. Agonia said in an email.
The Board of Investments (BoI) approved investment pledges worth P150.34 billion by 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%).
By 2025, about 45% or P122.48 billion of the total allowed foreign investment 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%).
By 2025, Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) closed corners with an estimated P100.43 billion of these investment pledges. Central Luzon will receive P70.74 billion while the Bicol Region will receive P50.76 billion.
LATE WAKE UP IN Q4
PSA data also showed foreign investment pledges rose 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 foreign investment increased by 423.4% to P143 billion.
“Jumping in [fourth-quarter] authorized foreign investment may be attributed to the underlying effects. The Q4 2025 reading saw a rebound from a low point but historically it is still lower than the previous Q4 pledge reading,” said Mr. Agonia, noting that pledges fell sharply in the fourth quarter of 2024 due to tax uncertainty.
Mr. Peña-Reyes said the agencies may also “backload” the approval of major investments in the last months of 2025.
“There has been project momentum in strategic areas such as energy, IT-BPM, and infrastructure,” he said. “There has been a moderate improvement in sentiment and continued policy support, which has encouraged the completion of deals that were delayed earlier in the year.”
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% shares) and SBMA with commitments of P1.29 billion (1.2%).
In the fourth quarter, the Netherlands was the largest 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).
During the period of October to December, the Bataan Freeport Area Authority, 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 accept any investment promises.
The energy sector also accounted for the largest foreign investment approval at P49.41 billion in the fourth quarter, about 47.8% of the total pledges during the period.
About 33.6% or P34.68 billion of approved foreign investment will go into the manufacturing sector, while 4.6% or P4.76 billion will be invested in the information and communication sector.
During this period, 45.3% of foreign investment commitments worth P46.85 billion will go to projects in Calabarzon.
Central Luzon closed investment commitments worth P35.36 billion while Negros Island Region received P7.79 billion.
If these foreign commitments are fulfilled, these projects are expected to generate 101,164 jobs, which is 0.8% less than the 101,966 jobs expected last year.
Meanwhile, PSA data showed combined investment commitments from foreign and Filipino investors rose 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 foreigners and Filipinos decreased by 1.7% to P1.92 trillion, from P1.96 trillion last year. Investment pledges by Filipinos reached P1.65 trillion last year, accounting for 85.8% of the total.
Mr. Peña-Reyes said there may be a “moderate recovery” in foreign investment pledges in the first quarter of 2026.
“The outlook is supported by project pipelines and sector prospects, but is still influenced by cautious investor sentiment,” he said.
“Throughout the year, there may be a gradual strengthening if reforms and policy clarity improve, with key sectors attracting continued interest. Actual FDI (foreign direct investment) flows may slow, but may pick up as confidence grows,” he added.
On the other hand, Mr. Agonia said that investment pledges may remain low until the end of the year.
“The slowdown in the fragile growth situation due to corruption, its effects on government spending and consumer and investor confidence will likely continue this year, preventing any major improvement in the business environment,” he said.
PSA’s data on foreign investment commitments, which may take place soon, is different from foreign direct investment tracked by the BSP. The central bank’s supervision goes beyond projects and includes other things like reinvested profits and lending to Philippine units through their debt instruments.
