MANILA, Philippines — The Philippines has finally moved into the upper-middle-income bracket, but global investors are still ranking it behind several of its Southeast Asian neighbors.

That gap showed up in Kearney's 2026 Foreign Direct Investment Confidence Index, where the Philippines slipped in the emerging-market rankings and trailed Thailand, Malaysia, Indonesia and Vietnam.

Kearney Philippines country head Marco de la Rosa and Southeast Asia managing partner Varun Arora said the country's new income status gives it a stronger story to tell investors, but the upgrade has not yet translated into stronger investor confidence.

"Unfortunately, in the last two to three years, in the FDI index and the investments, Philippines has dropped rankings a bit vis-a-vis the ASEAN countries, which has also reflected the flow of the money," Arora told Philstar.com.

The challenge now, they said, is for the Philippines to match its upgraded income status with stronger competitiveness, infrastructure and governance.

Investor confidence gap

Kearney's FDI Confidence Index is based on an annual survey of global business leaders and ranks markets where investors are likely to place capital in the next three years.

In the 2026 index, the Philippines ranked 18th out of 25 emerging markets, down from 16th place in 2025.

Other Southeast Asian economies ranked higher. Thailand placed sixth, Malaysia seventh, Indonesia 13th and Vietnam 16th.

De la Rosa said the Philippines' income upgrade should, in theory, help its standing in the index.

"It should improve the ranking of the Philippines in the confidence index because at least the scoring of the Philippines will improve because that one factor of financial performance should be reflected. But it also depends on how the other factors hold up," De la Rosa said.

According to De la Rosa, global business leaders identified talent and skills availability, natural resources and economic performance as the top factors that attract investment to the Philippines.

But investors rated the country lowest in infrastructure and governance, pointing to gaps that could weigh on long-term competitiveness.

The income upgrade

The World Bank reclassified the Philippines this year after its gross national income per capita reached $4,850, clearing the $4,636 threshold for upper-middle-income status.

The move ended nearly four decades of the Philippines being classified as a lower-middle-income economy.

But de la Rosa noted that the country remains near the bottom of the upper-middle-income bracket, which runs from $4,636 to $14,375 in GNI per capita.

"I mean, we've moved up a level in terms of the classification, but we are still actually, from a gross national income standpoint, lower than Vietnam, Thailand, Malaysia, etc," De la Rosa said.

A tougher league

De la Rosa and Arora likened the country's new status to a football club being promoted to a higher league.

The Philippines has shown enough progress to move up, they said. But the new status also puts it in a more competitive field, where investors will compare it more closely with stronger and better-prepared markets.

President Ferdinand Marcos Jr. has already used the new income status in his pitch to foreign investors. During his July 14 to 16 working visit to Singapore, Marcos described the Philippines as a newly designated upper-middle-income country with "solid macroeconomic fundamentals."

"As a newly designated upper middle income country with solid macroeconomic fundamentals, the Philippines offers a secure, transparent and stable environment for businesses to thrive," Marcos said in his arrival statement.

Kearney said the upgrade should be treated not as a finish line, but as a reason to move faster on infrastructure, governance and economic diversification.

As in competitive sports, moving up means facing stronger opponents and higher stakes, De la Rosa said.

"The stakes will only keep getting higher and higher," De la Rosa said. "Ultimately we need to compete to win."