In May 2025, the Philippines will hold its midterm elections—a political event that may not grab global headlines like presidential races, but one that carries significant weight for foreign investors, trade partners, and supply chain operators who rely on Southeast Asia’s rising economies.
Midterm elections in the Philippines serve as a referendum on the current administration’s performance, shaping the legislative agenda for the next three years. For businesses with exposure in the archipelago—whether through manufacturing bases, service centres, infrastructure investments, or export-import corridors—understanding the 2025 elections isn’t just a political curiosity. It’s an operational imperative.
Why the 2025 Midterm Elections Matter
The 2025 elections will decide 12 of the 24 Senate seats, all 316 seats in the House of Representatives, and thousands of local government positions across provinces, cities, and municipalities. This vote will determine whether the Marcos Jr. administration can continue pushing its economic and trade reforms—or whether it will hit legislative resistance.
As of 2024, President Ferdinand “Bongbong” Marcos Jr. has focused on infrastructure development under the “Build Better More” program, increased engagement with the US and Japan, revived interest in renewable energy and mining, and introduced select reforms to liberalise foreign investment rules.
A midterm victory would cement the political capital required to push through complex reforms, such as amending restrictive economic provisions in the 1987 Constitution or upgrading the country’s lagging logistics infrastructure. On the flip side, a loss in the Senate or a fragmented House majority could dilute investor confidence, freeze regulatory clarity, and slow legislative momentum.
Track Record: The Philippines Under Marcos Jr. (2022–2025)
So far, the Marcos administration has taken a mixed but generally pragmatic approach to economic governance. Key achievements relevant to foreign investors include:
- Public Service Act amendments: The opening of key sectors such as telecommunications, transportation, and railways to 100% foreign ownership (Republic Act No. 11659) was a landmark reform carried over from the Duterte era and implemented more aggressively under Marcos Jr.
- MAF (Manufacturing, Agribusiness, Fisheries) focus: The administration has promoted investment in agro-industrial zones and downstream processing to reduce reliance on raw exports and increase domestic value-add.
- Renewable energy liberalisation: In 2022, the Department of Energy removed foreign ownership limits for renewable energy projects (excluding nuclear), inviting Japanese, Korean, and European players into solar, wind, and geothermal development.
- Improved ties with the West: While the previous administration leaned heavily on China, the Marcos Jr. government has balanced ties with both the US and Japan. In 2023, the Philippines joined Indo-Pacific trade and investment frameworks such as the Indo-Pacific Economic Framework (IPEF) and reinforced defence-economic cooperation through the Enhanced Defense Cooperation Agreement (EDCA).
Yet, key bottlenecks remain:
- Persistent red tape and bureaucratic inertia
- Weak logistics connectivity between islands
- Skills mismatch in emerging sectors like high-tech manufacturing
- Ambiguity around fiscal incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act
Trade Policy Outlook: Continuity or Course Correction?
Foreign investors watching the 2025 elections are essentially trying to answer this: will the post-election Philippines remain pro-trade, pro-market, and foreign-friendly?
As of now, the momentum leans toward continuity. The Department of Trade and Industry (DTI) continues to push for greater participation in regional and global value chains. The Philippines remains a strong member of ASEAN and is committed to the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade bloc.
In fact, the Philippines ratified RCEP in 2023 after months of political hesitancy. This sends a clear signal that the country wants to attract manufacturing relocations from China and Vietnam, especially in electronics, garments, and agrifood sectors.
However, the extent to which RCEP benefits are realised depends on:
- Post-election regulatory consistency
- Local government support in industrial zones
- Customs and trade facilitation reforms (Philippines ranks 113th in the World Bank’s 2023 Logistics Performance Index)
If nationalist or populist candidates gain power—especially in the Senate—it could slow down further liberalisation efforts or even trigger protectionist pushback in sensitive sectors like mining, agriculture, or foreign retail.
FDI Trends and What Investors Should Watch
Foreign Direct Investment (FDI) inflows to the Philippines peaked in 2017–2018 at over USD 10 billion, then dipped during the pandemic. In 2023, the country saw USD 8.4 billion in net FDI inflows (Bangko Sentral ng Pilipinas). The most active sectors included:
- Manufacturing (electronics, automotive parts)
- Real estate and construction
- Financial services
- Renewable energy
But concerns persist:
- The Philippines lags behind peers like Vietnam and Indonesia in attracting supply chain relocations
- Foreign investors cite high logistics costs (around 24% of total business expenses) and slow permitting processes as key deterrents
- Tax incentives remain confusing post-CREATE, especially for new entrants vs. existing locators in PEZA (Philippine Economic Zone Authority)
Post-2025, we expect three FDI trends to accelerate—depending on election outcomes:
- China+1 strategy: Western and Japanese firms will continue shifting some operations from China. The Philippines could win deals in semiconductors, medical devices, and specialty chemicals if it improves ease of doing business.
- Green FDI: Renewable energy projects, e-vehicle component assembly, and smart agriculture systems will gain traction, especially under favorable LGU (local government unit) alignment.
- Digital services exports: BPO (business process outsourcing) and KPO (knowledge process outsourcing) remain strong. Post-election policy on remote work tax regimes and fibre infrastructure will be crucial here.
Key Sectors to Watch After 2025
Certain industries are more sensitive to post-election shifts in legislation, investor sentiment, or bureaucratic behaviour:
Mining and Natural Resources
Mining contributed around 1.1% to GDP in 2023, but accounts for 6% of exports and employs over 200,000 people. The Marcos administration lifted the ban on open-pit mining, sparking renewed foreign interest. But future Senate composition may influence:
- Mining tax reforms
- Environmental permit issuance
- Local community relations and Indigenous People’s rights
Agribusiness and Food Imports
Expect tighter food trade regulations if agricultural protectionism rises post-election. Inflation concerns and food sovereignty rhetoric often dominate midterm platforms, which could affect:
- Rice import quotas and tariff schedules
- Animal feed and input supply chains
- Export bans in extreme weather conditions
Transport Infrastructure
The “Build Better More” pipeline includes over 100 flagship projects, from airports and seaports to rail systems. Foreign EPC (Engineering, Procurement and Construction) players—especially from Korea and Japan—stand to benefit, but project continuity will depend on:
- Legislative support for public-private partnerships (PPPs)
- Fiscal space post-2025
- Provincial election results that determine local cooperation
Digital and Tech
The Philippines remains a global BPO hub, but is now pushing into AI, fintech, and cybersecurity. Foreign VCs and digital service providers will watch for:
- New digital tax regulations
- Data localisation laws
- Cybercrime and digital infrastructure legislation
Risks and Opportunities: What Should Export-Import Players Do?
For global trade and export-import players, the Philippines is an attractive but complex market. The 2025 elections can either enhance or disrupt this opportunity landscape.
Risks to Watch
- Post-election uncertainty leading to policy inertia
- Populist-led changes in trade or investment rules
- Regulatory whiplash from shifting legislative majorities
- Volatility in currency or fuel prices from global economic conditions and domestic political responses
Opportunities to Capture
- Rising demand for intermediate goods as manufacturing ramps up post-RCEP
- Strategic logistics partnerships with local firms to support archipelagic connectivity
- Greater uptake of e-commerce platforms requiring cross-border fulfilment
- First-mover advantage in renewable energy supply chain components (solar panels, battery storage, EV chargers)
Final Thought: Betting on Political Stability, but Preparing for Strategic Agility
The Philippines is no stranger to political change, but its economy has proven remarkably resilient. GDP growth is projected at 6% in 2025 by the ADB, inflation is moderating, and a young, English-speaking workforce continues to attract global firms.
That said, political risk must be embedded into every trade and investment strategy in the country. The 2025 elections will likely define the economic playing field until the 2028 presidential race.
Investors and exporters who stay close to political developments, build flexibility into their supply chains, and engage with local partners across all levels of government will be best positioned to navigate what’s next.
In Southeast Asia, agility is not optional—it’s a survival skill. And in the Philippines, it’s also the key to growth.
Join Hi-Fella Today!
As the Philippines heads toward its 2025 elections, shifts in trade policy and investor sentiment are inevitable — but for savvy export-import businesses, this also opens doors. Hi-Fella helps you stay ahead of the curve with up-to-date market intelligence, access to verified local partners, and tools to navigate changing regulations with confidence.
Whether you’re eyeing new opportunities or safeguarding existing operations, Hi-Fella equips you to make informed decisions and build strong, compliant trade relationships in the evolving Philippine market. Now is the time to position your business smartly — and Hi-Fella is the partner to help you do it.
