Philippines Foreign Direct Investment (2024)

FAQs

What is the foreign direct investment situation in the Philippines? ›

Net foreign direct investment (FDI) in the Philippines advanced 29.9% year-on-year to USD 0.83 billion in December 2023. The increase was mainly due to an expansion of net inflows for net debt instruments (86.2% to USD 0.53 billion), and reinvestment of earnings (4.1% to USD 0.09 billion).

FDI allows the transfer of technology—particularly in the form of new varieties of capital inputs—that cannot be achieved through financial investments or trade in goods and services. FDI can also promote competition in the domestic input market.

Despite growing FDI inflow levels, the Philippines continues to lag behind regional peers, in part because the Filipino constitution limits foreign investment, and also due to the threat of terrorism in some parts of the country.

​Foreign direct investment (FDI) net inflows grew by 89.9 percent to reach US$907 million in January 2024 from the US$478 million net inflows in January 2023 (Figure 1).

For the case of the Philippines, it was revealed that while FDI causes economic growth, the latter also stimulates the former. Thus, there is a two-way causality between the two. FDI-to-growth causality is reinforced by the presence of greater trade openness, more limited rule of law, lower receipts of aid.

Germany emerged as the leading foreign investor in the Philippines, with total investments amounting to approximately 394 billion Philippine pesos. The Netherlands came next with about 350 billion Philippine pesos in investments.

The Philippines seeks foreign investment to generate employment, promote economic development, and contribute to sustained growth.

Poor infrastructure, high power costs, slow broadband connections, regulatory inconsistencies, a cumbersome bureaucracy, and corruption remain disincentives to investment. The Philippines' complex, slow, redundant, and sometimes corrupt judicial system inhibits the timely and fair resolution of commercial disputes.

First, the PSA Amendatory Law, which was signed into law on 02 March 2022, removes restrictions on foreign ownership in public services, such as telecommunications, transportation, and power generation. This means that foreign investors can now own 100% of businesses in these sectors, up from the previous limit of 40%.

The country's location is a critical entry point to over 600 million people in the ASEAN Market and a natural gateway to the East- Asian economies. The country is likewise placed at the crossroads of international shipping and airlines.

What percentage of GDP is FDI in the Philippines? ›

Philippines Foreign Direct Investment (FDI) registered a growth equal to 2.0 % of the country's Nominal GDP in Dec 2023, compared with a growth equal to 2.2 % in the previous quarter. Philippines Foreign Direct Investment: % of Nominal GDP data is updated quarterly, available from Mar 2005 to Dec 2023.

Philippines Investment accounted for 21.6 % of its Nominal GDP in Dec 2023, compared with a ratio of 22.0 % in the previous quarter. Philippines investment share of Nominal GDP data is updated quarterly, available from Jun 1972 to Dec 2023, with an average ratio of 22.5 %.

a) Trade and investment

The main trade-related benefit of FDI for develop- ing countries lies in its long-term contribution to integrating the host economy more closely into the world economy in a process likely to include higher imports as well as exports.

Foreign direct investment can reduce the disparity between revenues and costs. With such, countries will be able to make sure that production costs will be the same and can be sold easier.

Foreign investment affected the growth of Filipino national consciousness during Rizal's period. This is due to the infusion of new ideas and technology brought in by foreign investment, which aided economic development and social improvement.