Manila: Foreign Direct Investments (FDIs) in the Philippines recorded a net inflow of USD320 million (PHP18.96 billion) in September, the Bangko Sentral ng Pilipinas (BSP) reported Wednesday. Japan emerged as the leading source of FDIs, with the manufacturing sector being the primary recipient of these investments during the month.
According to Philippines News Agency, the data released by the BSP indicated that the net inflow for September was lower than the previous month's USD514 million and last year's USD432 million. By the end of September, the total FDIs reached USD5.54 billion, a decline from the previous year's USD7.1 billion, which represented 1.6 percent of the domestic economy's output in the first three quarters of this year.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort attributed the decrease in FDIs to several factors. The impacts of weather disturbances, which reduced working days, and concerns about government corruption, specifically surrounding anomalous flood control programs, were significant contributors. Additional influencing factors include the US tariff policies, reduced global economic output, and changes in investment trends.
However, Ricafort noted that these negative factors were partially offset by reductions in key interest rates by both the BSP and the US Federal Reserve. These reductions have lowered borrowing and financing costs, thereby increasing the demand for loans and credit, which finance investments, new and expansion projects, as well as capital and operating expenditures of many businesses and industries.
Looking ahead to the last quarter of the year, Ricafort expressed optimism for potential improvement in FDI figures, contingent on better weather conditions and the implementation of anti-corruption reforms. He emphasized that such measures, alongside improvements in governance, fiscal, tax, and economic performance, are crucial for boosting foreign investor confidence in the Philippines.
Meanwhile, the Asian Development Bank (ADB) has revised its growth forecast for the Philippines, citing lower government infrastructure spending amid investigations into flood control programs. The latest Asian Development Outlook reduced the GDP growth projection for 2025 from 5.6 percent to 5 percent, and for 2026 from 5.7 percent to 5.3 percent. Ricafort highlighted that although this adjustment is expected to impact FDIs, the negative effects may be mitigated by ongoing anti-corruption efforts and reforms aimed at enhancing governance standards, thereby bolstering investor confidence in the country's economic and financial markets.
