The Aquino administration witnessed a surge in foreign investment, but with a distinct preference. While manufacturing showed signs of life, the real winners were the service and financial sectors, fueled by growing confidence in the capital markets and a liberalization of banking regulations. Lowered interest rates further encouraged investment across the board, and a booming business process outsourcing industry drove a significant increase in real estate development.
Under President Duterte, the investment landscape became markedly more unpredictable. Large-scale infrastructure projects dominated the flow of funds, but regulatory uncertainties and the sudden shock of the COVID-19 pandemic created significant volatility. A massive P1.39 trillion poured into electricity and energy, aligning with the administration’s ambitious “Build, Build, Build” program, while telecom and digital infrastructure saw a spike in 2019.
The Marcos Jr. administration initially signaled a shift, with manufacturing taking center stage as a key driver of foreign direct investment. By 2024, this sector reached P1.4 trillion, a clear indication of renewed industrial interest. Real estate also rebounded strongly as the economy reopened, supporting construction and related services, and transportation saw a stabilization of inflows.
A cornerstone of the Philippine economy, remittances from overseas Filipino workers (OFWs) continued to provide crucial stability. Even amidst rising domestic inflation, these inflows – reaching $38.2 billion in 2024 – acted as a countercyclical force, supporting household consumption and mitigating income pressures. This consistent flow of funds has been a long-standing strength for the nation.
Alongside OFW remittances, the Information Technology and Business Process Management (IT-BPM) sector emerged as another vital pillar of the Philippine economy. Growth accelerated post-pandemic, driven by demand for digital services like e-commerce, healthcare, and finance. By 2024, the industry generated $38 billion in revenue and employed 1.7 million Filipinos, poised to surpass $40 billion before the end of the administration.
Despite these positive developments, the Philippines has lagged behind its ASEAN neighbors in attracting overall foreign direct investment. While countries like Vietnam, Indonesia, and Malaysia consistently attract $15-$30 billion annually, the Philippines has struggled to reach $10 billion, experiencing a dramatic 50% drop in 2025 following a damaging corruption scandal.
The recent flood control scandal served as a stark reminder that governance remains a critical obstacle to attracting foreign capital. A stable and effective rule of law is essential to instill investor confidence and redirect investment flows currently heading to other nations in the region. Strengthening governance must be a priority for the remainder of the Marcos Jr. administration.
While improvements have been made – including greater openness to foreign investment and increased focus on technical skills – the Philippines’ investment-to-GDP ratio remains low, hovering around 20-23% compared to the 25-30% average in East Asia. This shortfall has constrained economic growth, preventing the nation from reaching its potential of 8-10% and hindering the development of higher value-added industries.
The events of 2025 underscored a crucial need: unwavering political will to improve governance. Addressing systemic issues and fostering a transparent, accountable environment are not merely desirable, but essential for unlocking the Philippines’ full economic potential and achieving transformative growth.
