FDI in PH rises slightly to $8.93B in 2024 but falls short of BSP target

Foreign direct investments (FDIs) into the Philippines increased slightly to $8.93 billion in 2024 compared with $8.925 billion in 2023, marking an end to two consecutive years of decline but falling short of the Bangko Sentral ng Pilipinas' forecast of a $10-billion net inflow.

FDI net inflows dropped sharply by 85.2% in December 2024 to $110 million, reaching its lowest level since December 2013 due to increased debt repayments from local firms to non-resident investors.

Japan was the top contributor of FDIs at 38%, followed by the United Kingdom (35%), the US (10%), and Singapore (8%). Over half of FDIs last year went to the manufacturing sector.

Despite challenges such as potential US protectionist policies and heightened tensions between China and the Philippines, anticipated rate cuts by both the Fed and BSP could lower borrowing costs and make financing more attractive for foreign investors.

Rizal Commercial Banking Corporation chief economist Michael Ricafort attributed the FDI inflow slump to anticipation of implementing rules and regulations (IRR) under the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, which may influence future investment decisions.