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

According to Philippines News Agency, data released late Tuesday revealed that Japan emerged as the largest source of FDI, with the majority of inflows directed towards financial and insurance activities. FDIs encompass investments by non-resident direct investors in resident enterprises, where the equity capital in the latter is at least 10 percent, as well as investments made by non-resident subsidiaries or associates in their resident direct investors.

The FDI may take the form of equity capital, reinvestment of earnings, and borrowings. Despite the December increase, FDI net inflows for the entire year of 2025 decreased to USD7.8 billion from USD9.4 billion in the previous year. Equity capital placements were mainly sourced from Japan, the United States, Singapore, and South Korea. The BSP indicated that investments were largely channeled into the manufacturing, wholesale and retail trade, and financial and insurance sectors.

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