Christy Balita
Research expert covering the Philippines
Foreign direct investment (FDI) into the Philippines - statistics & facts
The inflow of foreign direct investments (FDI) to the Philippines had a minimal contribution to the nation’s gross domestic product (GDP) in comparison to its peers in the Asia-Pacific region. Specifically, the net inflow of foreign direct investments contributed less than five percent to the country’s GDP. FDI plays a significant role in the economy by allowing business entities in one country to invest in another. Among the leading factors that attracts foreign direct investments include efficient business regulations, high-quality infrastructures, and the availability of skilled workforce. In 2024, the Philippines ranked alongside Chile and Turkey when it comes to the FDI confidence index of emerging economies.
In recent years, the Philippines has made significant changes to its foreign investment laws to attract foreign investors to the country to boost the economy and produce more jobs. The Public Service Act (PSA) Amendatory Law was signed in 2022 to remove restrictions on foreign ownership in public services. This act allows foreign investors to have full ownership of business in these sectors, from the previous limit of 40 percent. Several other laws have been passed to make it easier for foreign investors to do business in the country, including increased tax incentives.
The value of net FDI inflow to the Philippines continues to fluctuate in the past decade. Despite being the fastest-growing economy in Southeast Asia in 2023, the Philippines must strive to improve its investment climate by providing efficient regulations to attract additional foreign investments.
Development of net FDI inflow to the Philippines
The Philippines received net foreign direct investments amounting to approximately 8.86 billion U.S. dollars according to preliminary figures for 2023. Net FDI inflows to the country peaked in 2021, with over 12 billion U.S. dollars. Countries in Asia, particularly Japan and Singapore, have been the leading sources of net FDI received in the Philippines. In 2023 alone, Japan sent approximately 849 million U.S. dollars in foreign direct investments, just 200 million shy of its peak investment value in 2016.In recent years, the Philippines has made significant changes to its foreign investment laws to attract foreign investors to the country to boost the economy and produce more jobs. The Public Service Act (PSA) Amendatory Law was signed in 2022 to remove restrictions on foreign ownership in public services. This act allows foreign investors to have full ownership of business in these sectors, from the previous limit of 40 percent. Several other laws have been passed to make it easier for foreign investors to do business in the country, including increased tax incentives.
Components of FDI and invested sectors
Among the different FDI components, net debt instruments, or short-term and long-term borrowing and lending of funds between direct investors and affiliate enterprises, accounted for the highest valued component of net FDI inflow to the Philippines in 2023. Meanwhile, equity capital, or the purchase of shares of a foreign enterprise, registered its lowest value since 2019. The majority of FDI equity investments were placed in the manufacturing sector, followed by wholesale and retail, and real estate activities.The value of net FDI inflow to the Philippines continues to fluctuate in the past decade. Despite being the fastest-growing economy in Southeast Asia in 2023, the Philippines must strive to improve its investment climate by providing efficient regulations to attract additional foreign investments.
