The Philippines recorded a $690-million net inflow of foreign direct investments (FDI) in August, an increase of 24.9% from $552 million in the same month a year earlier, according to data released by the Bangko Sentral ng Pilipinas (BSP), the country's central bank.

The August result was the strongest monthly net inflow in seven months, or since January's $800 million. Measured month on month, net inflows edged up by 0.15% from $689 million.

FDIs refer to cross-border investments in which a nonresident investor holds at least 10% equity in a resident enterprise. These may take the form of equity capital, reinvestment of earnings, and intercompany borrowings. The 10% threshold denotes a lasting interest in the enterprise, distinguishing FDI from portfolio holdings that do not confer the same degree of influence over a company's operations.

Stronger Equity Flows in August

Based on BSP data, investments in equity and investment fund shares surged by 42.4% to $554 million in August from $389 million a year earlier. Nonresidents' investments in net equity capital, other than reinvestment of earnings, increased by an annual 29.5% to $189 million from $146 million.

Equity capital placements soared by 60.8% to $254 million in August from $158 million the prior year, while withdrawals increased fivefold to $65 million from $13 million. Reinvestment of earnings, meanwhile, stood at $365 million, up by 50.2% from $243 million a year ago. This component captures profits that foreign investors retain within their local ventures rather than remit abroad.

Net investments in debt instruments, however, fell by 16.7% annually to $136 million in August from $164 million in the same month last year. These investments consist mainly of intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines. The remainder are investments made by nonresident subsidiaries or associates in their resident direct investors, known as reverse investment.

Eight-Month Inflows Lower Year on Year

For the first eight months of the year, however, the country's net FDI inflows fell by 19.2% to $4.768 billion from $5.902 billion a year earlier.

"The decline was driven mainly by lower net investments in debt instruments," the central bank said in a statement issued late Tuesday. "This reflected lower net intercompany borrowings from foreign direct investors during the period."

Investments in equity and investment fund shares reached $2.203 billion as of August, slipping by 1.7% from $2.241 billion the year prior. Net foreign investments in equity capital, excluding reinvestment of earnings, were essentially flat for the eight months to August at $870 million from $871 million last year.

According to the BSP, equity capital placements as of August flowed mostly from Japan, the United States, and Singapore, falling by 13.2% to $1.185 billion from $1.365 billion a year ago. These funds were channeled into the local manufacturing, financial and insurance, and real estate industries, the central bank added.

Withdrawals likewise declined by 36.4% to $314 million as of August from $494 million in the comparable year-ago period. Reinvestment of earnings inched down by 2.7% to $1.333 billion in the period ending August from $1.37 billion the previous year.

Nonresidents' net investments in debt instruments of local affiliates stood at $2.565 billion, down 30% from the $3.661 billion logged as of August 2025.

Data Methodology and Full-Year Outlook

The BSP's FDI data reflect actual investment flows. This differs from the Philippine Statistics Authority's approved foreign investment data, which represent investment commitments that may not necessarily be realized within the reference period.

The central bank expects FDI net inflows to fall to $6.5 billion this year from $8.1 billion in 2025. The BSP publishes FDI figures monthly, so the September reading will be the next indicator of whether August's strength carried into the final months of the year.

This article was first published by BusinessWorld. The original report, by Katherine K. Chan, is available at bworldonline.com.