(Part 1)
The controversy surrounding Pax Silica resulted from a classic case of lack of communication and even miscommunication on the part of the Philippine Government.
There were very valid complaints from the communities surrounding the 1,620-hectare property at New Clark City in Capas, Tarlac that is supposed to be the site for a hub for artificial intelligence (AI), advanced manufacturing, supply chains for critical minerals, energy, and logistics. Where are we going to obtain all the water, energy, transport facilities, and human resources that will be needed to support the operations of the industrial hub? What will happen to the indigenous peoples whose homes will be displaced by the project? Where is the comprehensive Environmental Assessment? The demand for transparency and complete information was summarized by Capas Mayor Roseller Rodriguez who rightly remarked that “no other proximate community stands to bear the brunt of the environmental issues of the proposed Pax Silica project than the municipality of Capas.”
This lack of communication was also evident on Sept. 10 when some 600 top businesspeople and government officials gathered in a posh hotel in BGC for the Luzon Economic Corridor Investment Forum, which should been held even before the mysterious phrase “Pax Silica” was ever publicized. No wonder outside of the hotel where the forum was being held, many held placards reading “Reject Pax Silica” leading to the arrest of five paralegals.
A great deal of the misunderstandings and misapprehensions about Pax Silica could have been avoided if the appropriate Philippine agencies spent more time explaining in detail what was launched as early as April 2024: the Luzon Economic Corridor (LEC), a major multilateral infrastructure and development initiative connecting key economic and logistics hubs across Luzon. It would have been crystal clear that without the effective implementation of the LEC, Pax Silica would only be an empty promise. It is LEC that will provide all the water, the energy, the transport and logistics, the skilled workers, and other infrastructural requirements of the factories envisioned to be located in that planned industrial hub in the New Tarlac City. Without investments in all types of infrastructure along the LEC, the Pax Silica would literally be a pie in the sky.
The LEC was first launched in April 2024, more than two years ago. It took a while before all the stakeholders of Pax Silica were informed about the important details that would have assured the communities affected that, with the proper implementation of the infrastructure projects lined up by the US, Japan, and its numerous partners under the umbrella of the G7 Partnership for Global Infrastructure and Investment (PGI), all their concerns about inadequate water, energy, logistical facilities, etc. would be addressed.
Even before announcing the Pax Silica initiative, the appropriate government agencies should have explained in great detail the four vital industrial nodes that make up the LEC: the Subic Bay Deep-water port, shipbuilding, and maritime trade hub; Clark, the aviation center, technology park, and high-tech manufacturing node (especially high-value semiconductors); the NCR, which will be the main economic and financial center; and Batangas, the major industrial port, manufacturing, and energy hub south of the capital (the province has dozens of very advanced industrial estates and technoparks that can already accommodate some of the factories that will be moving away from China, and even Taiwan that is already suffering from severe shortages of workers).
The negative reactions to Pax Silica would have been much less, though not totally eliminated, if the focus areas and priority projects of the LEC had been better communicated and explained. Among these were the development of the Subic-Clark-Manila-Batangas Railway which would link major deep-water ports and decongest Manila’s urban transit system; the grid stability upgrades, fuel distribution pipelines, civil nuclear education programs, and renewable energy integration; integration and expansion of semiconductor assembly, electronics supply chains, and agribusiness processing; and deployment of secure 5G networks and digital innovation networks across industrial parks.
Before proceeding to describe in greater detail the intimate interconnection between the Luzon Economic Corridor and Pax Silica, let us try to understand better just what exactly this US-led international initiative is all about. The Philippines joined Pax Silica in April 2026, becoming its 13th signatory at that time, alongside countries including the US, Japan, South Korea, India, Singapore, Australia, Israel, the United Kingdom, and more recently Spain and the European Union.
It has clearly geopolitical implications. It is meant to make the supply chains for semiconductors, artificial intelligence, critical minerals, advanced manufacturing, and other strategic technologies more secure and less dependent on vulnerable or geopolitically sensitive sources, particularly China that at present has monopolistic or oligopolistic control of these critical sectors.
The name combines two Latin words, Pax (peace), and silica (the basic material from which silicon — the foundation of modern semiconductor technology — is produced).
For the Philippines, the most concrete proposal is a large AI and advanced-manufacturing industrial hub in New Clark City, Tarlac. The area covers some 4,000 acres (about 1,620 hectares).
This ambitious industrial hub in Clark would remain a paper plan if the Luzon Economic Corridor fails to take off. The LEC is meant to dramatically lower freight costs, streamline transshipments, and cut transport delays between Northern and Southern Luzon. It also involves the commitment of the US, Japan, and its global allies to bring targeted investments in shipbuilding, energy, and port infrastructure. In fact, in early September, one of the most recent countries to join LEC, Spain, announced that it will pursue projects in railways, modular infrastructure, aviation, shipbuilding, air-navigation management, and renewable-energy connectivity. In addition, I personally have been advocating that we turn to Spain to assist us in addressing our serious problem of flooding through the building of mini dams all over the country.
As President Ferdinand Marcos, Jr. announced in his fourth State of the Nation Address, the Philippines is ready to consider putting up a modular nuclear energy plant to bring down energy costs. The countries already in the LEC pact that have the technology to help us in this regard are the US and South Korea.
On Sept. 10 and 11, the inaugural Luzon Economic Corridor Investment Forum was held at the Grand Hyatt in BGC. It convened over 600 international investors, industry executives, and government leaders to mobilize private capital (something very scarce in the Philippines because of our abysmally low rate of domestic savings) and sign commercial partnerships across the corridor. A major highlight of the forum was the official signing of the $60-million Philippines Energy Threshold Program grant through the US Millennium Challenge Corp. (MCC). Designed to support the corridor’s clean energy pillar, this program addresses grid stability, institutional capacity, and energy infrastructure to support incoming industrial loads, first and foremost among the dozens of industrial zones already operating in the Calabarzon and Central Luzon regions.
Industrial developments along the corridor (particularly in Clark and Subic) are officially aligning with Pax Silica, as already mentioned, a major allied initiative to build secure, AI-native semiconductor supply chains. Key real estate projects, such as the planned hub in New Clark City and the TARI estate in Tarlac, are expanding to accommodate high-value electronics, hardware manufacturing, and automated warehousing. In fact, Foxconn (officially Hon Hai Precision Industry Co., Ltd), a Taiwanese multinational electronics contract manufacturer and the world’s largest) is preparing to serve as the flagship anchor investor in Pax Silica.
Philippine Finance Secretary Frederick Go confirmed that the government is finalizing a formal framework agreement with Foxconn, targeting execution before the end of 2026. The Philippine government projects that securing Foxconn as the prime anchor tenant will mobilize between $40 billion and $70 billion in total FDI over the hub’s lifecycle. This is expected to draw secondary component suppliers, testing labs, and R&D facilities into the Luzon Economic Corridor ecosystem.
I am very much aware that these are all plans and may not materialize for one reason or another. Given the many participants in the LEC that are allies of the US and Japan addressing a geo-political necessity, I am confident many of these plans, if not all, will be realized in the next 10 years, in contrast with the empty promises made by the Chinese Government to the former President Rodrigo Duterte.
(To be continued.)
Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.