Philippines races to turn Pax Silica into reality before political changes derail dreams

The Philippines has less than two years to turn its ambitious Pax Silica project from a US-backed plan into a functioning industrial hub before a change of government in Manila – and potentially Washington – puts its future to the test. Pax Silica is an initiative by US President Donald Trump’s administration to diversify US supplies of critical minerals and semiconductors. The Philippines is seeking to position itself as a manufacturing base for companies looking to reduce their dependence on China. With Philippine President Ferdinand Marcos Jnr due to leave office in 2028 and Trump facing the midterm election in November that could change control of Congress, the project needs to move quickly to establish agreements and infrastructure that can survive political change, according to Jonathan Ravelas, a former chief market strategist at the Philippines’ largest bank, BDO. “The faster the government can institutionalise agreements and deliver infrastructure, the lower the political risk,” Ravelas, now managing director of eManagement for Business and Marketing Services, told This Week in Asia. The question is whether Manila can deliver the reliable power, infrastructure and regulatory certainty investors need to commit billions of dollars before the political clock runs out. For now, much of it remains on the drawing board. On April 16, Washington accepted an offer from Manila to convert a 1,600-hectare (4,000-acre) plot of land – rent-free for two years – into the “Pax Silica coordination office”. The site sits inside the 9,450-hectare New Clark City – part of the much larger Clark Freeport and Special Economic Zone, a master-planned development envisioned to host government offices, sports facilities and other major infrastructure. As China dominates the supply and processing of several critical minerals used in advanced manufacturing, supply-chain diversification is a strategic priority for Washington. In February, the Philippines signed a memorandum of understanding on critical minerals with the US. Joshua Bingcang, president and chief executive of the state-owned Bases Conversion Development Authority (BCDA), which manages the area, admitted to This Week in Asia on Monday that nearly everything in the Pax Silica hub – since renamed the Clark Advanced Manufacturing Park – was still in the planning stage. That is, except for one foreign company “tenant” whom he would not name. Bingcang told the Foreign Correspondents Association of the Philippines on Monday that the company “signed an agreement [to lease] last week”. It will start hiring local engineers by October to be trained in Taiwan. These engineers would be “the ones to set up the machines, the factory lines” as part of technology transfer, he said. ‘Transcends political colour’ Bingcang believes Pax Silica can withstand political change because the BCDA has a history of pursuing major projects across administrations. “Our projects started two or three administrations ago, and they’ve seen the impact, so it’s really a no-brainer on the value we bring.” Pax Silica “transcends any political colour or any terms” because it was long-term, according to Bingcang. “The Philippines has a good track record of implementing multi-administration projects.” Alvin Camba, a trained political economist and sociologist who is chief scientist at Lyvi, a US defence technology company, said the issue, though “extremely sensitive” in the Philippines, would be able to weather political winds in Washington. “Pax Silica is not politically sensitive in the US. I don’t expect it to be something that Democrats would reverse if they happen to take both houses in November 2026 or win the presidency in 2028,” he said. “There is already near bipartisan consensus on taking a tougher stance on China. At the same time, there is a huge push from the big tech companies to expand their AI models and infrastructure in different parts of the world. So Pax Silica is really supported by both sides of this equation: the Department of [Defence] and the big tech firms.” He said the biggest concerns for foreign investors in the Philippines were “local political and regulatory conditions that could affect their operations, as well as energy and transportation costs”. “Regulations matter because companies do not want to invest hundreds of millions of dollars in a country that could stop or reverse their operations once the money has already been sunk and operations have begun.” Energy obstacle For investors, political continuity is only one part of the equation. “Pax Silica reminds me of the old button soup story. The idea is exciting, but a great soup needs more than a button – it needs ingredients,” Ravelas said. These ingredients include reliable power, world-class infrastructure, skilled talent, regulatory certainty and policy continuity. “The opportunity is real because global companies are looking to diversify supply chains, and the Philippines is well positioned to benefit. But interest is not the same as investment. The reported land lease commitment is encouraging, yet most of the names being mentioned remain prospective investors rather than signed commitments.” From an investor’s perspective, Ravelas said, “the biggest concern is not politics or regulation per se – it is execution”. Investors wanted assurance that infrastructure would be completed on time, power would be available at competitive prices, environmental and ancestral domain issues would be addressed transparently, and policies would remain stable beyond election cycles in both countries, he said. Those concerns are particularly significant in the Philippines, where energy costs and reliability have long posed challenges for manufacturers. “The main issue, more than anything else, is energy. This has been a failure of successive Philippine administrations since the 1980s. The lack of abundant, reliable and cheap energy makes it difficult for companies to operate,” Camba said. “This is actually one of the biggest reasons why companies have gone to Thailand, Malaysia, Indonesia, and Vietnam rather than the Philippines. In the end, they can simply operate more cheaply and with fewer problems in those countries.”

Philippines races to turn Pax Silica into reality before political changes derail dreams

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Philippines’ Marcos is due to leave office in 2028 while Trump faces US midterm elections next year that could change control of Congress

Philippines’ Marcos is due to leave office in 2028 while Trump faces US midterm elections next year that could change control of Congress