Pax Silica: Is the PH government prepared for it?

The Philippine government's decision to participate in the Pax Silica initiative has been presented as a transformative opportunity to position the country as a major player in the global AI (artificial intelligence), semiconductor, and advanced technology industries. 

No less than President Ferdinand Marcos Jr. touted in his last State of the Nation Address (SONA) how the country would benefit from this initiative. Supporters envision billions of dollars in investments, the creation of high-quality jobs, and the development of New Clark City (NCC) as a regional innovation hub. 

Yet alongside these promising prospects lies an equally important question: Does the government realize what its role in this initiative is?

What is Pax Silica

Pax Silica is a US-led international initiative aimed at ensuring resilient supply chains for artificial intelligence (AI), semiconductors, critical minerals, and other advanced technologies, ensuring that member countries cooperate in manufacturing, processing , and development of the technology needed. The Philippines joined the initiative in April 2026.

Why is BCDA Leading the Discussion?

The Bases Conversion and Development Authority (BCDA), the agency in-charge of developing former military bases and Clark into productive use, is apparently leading the discussions on Pax Silica. 

This begs the question of what the Philippine’s primary role in this initiative is. Does the government treat Pax Silica as a mere real-estate transaction, where BCDA offers a vast industrial land for long-term lease by foreign companies, which will then put up manufacturing facilities and data centers, generating employment and revenues for the country? 

BCDA’s “simplistic” responses to the issues being raised does not inspire confidence that the significance of this project has been thoroughly studied and considered, more than that of the level of a landlord-lessee relationship which it is used to implement.

The Philippines should not compete in terms of hub location, since other countries may offer better locations, where there are already existing infrastructures and utilities. Land itself is not the scarce commodity in the global competition for artificial intelligence and semiconductor investments. 

Many countries can offer industrial parks, tax incentives, and economic zones. AI data centers and semiconductor manufacturing facilities are known to consume enormous amounts of electricity and water, and requires sophisticated waste treatment systems. 

NCC is just a vast mixed-use land with no existing ample water or sufficient power supply or internet connectivity. Reliable power generation, stable electricity transmission, abundant water supply, modern transportation systems, and high-speed digital connectivity are essential for advanced technology industries. 

BCDA’s assurance that it will address the water requirement through water catchment technology and the power supply concern through solar technology are theoretical responses not borne by actual experience nor detailed scientific study.

The Philippines’ Greatest Bargaining Chip: Critical Minerals, Not Land

The greatest weakness in the current public discussion about Pax Silica is the apparent emphasis on land development rather than on the country's far more significant strategic asset—its abundant reserves of critical minerals.

The Philippines ranks among the world's leading producers of nickel and possesses substantial reserves of copper, cobalt, chromite, and other minerals that are indispensable to semiconductor fabrication, battery production, electric vehicles, aerospace applications, telecommunications equipment, and advanced defense systems. 

These minerals have become strategic assets whose importance rivals that of oil in the twentieth century. This realization should fundamentally reshape the government's negotiating position. The Philippines should not approach Pax Silica merely as a provider of land upon which foreign companies may construct factories or data center . 

Rather, it should negotiate as a strategic partner supplying one of the most valuable inputs in the entire technology ecosystem. Hence, the negotiating team should comprise agencies involved in the industrial trade policy, foreign affairs, national security, environmental protection, energy, and science and technology.

The distinction is crucial. If negotiations focus primarily on land leases, as what BCDA is doing, the country risks receiving only short-term economic benefits such as lease payments, construction employment, and local business activity. Valuable as these may be, they do not fully reflect the strategic importance of the country's mineral resources. 

Once long-term agreements are concluded without securing broader commitments, opportunities to obtain more enduring benefits may be lost. Instead, the government should leverage access to critical minerals to get commitments that will

strengthen the Philippine economy for decades. 

These may include the establishment of mineral processing facilities within the country rather than the continued export of raw ores; technology transfer agreements that enable Filipino engineers and researchers to acquire advanced expertise; investments in local research and development; partnerships with Philippine universities; supplier development programs for domestic enterprises; workforce training; and commitments to manufacture higher-value products locally rather than simply extracting or processing raw materials.

Such an approach would move the Philippines up the global value chain. Instead of remaining primarily an exporter of raw materials, the country could progressively become a producer of processed minerals, advanced components, semiconductor inputs, and eventually high-value technology products. 

This strategy would generate higher incomes, more skilled employment, greater tax revenues, and stronger domestic technological capabilities.

Summary

The true competitive advantage of the Philippines in Pax Silica is not the availability of land. It is the country's position as a reliable and indispensable supplier of critical minerals needed to sustain the AI technology. 

Recognizing this advantage should fundamentally influence the government's negotiating strategies. The objective is to leverage on our competitive advantage to get the maximum benefits for the country.

The government should appreciate that bargaining power is greatest before agreements are signed. Once long-term investment contracts have been concluded and fiscal incentives granted, opportunities to negotiate stronger commitments become considerably more limited. 

It is therefore imperative that the Philippines enter negotiations fully aware of the value of the strategic assets (critical minerals) it brings to the table.

Atty. Nena Radoc is a CPA-Lawyer-MBA with over 40 years of management experience in local and multinational companies.

Disclaimer: The opinions expressed by the author are her own and do not in any way reflect those of Paraluman News.

Photo: A section of New Clark City. (A screengrab of a photo on the Facebook page of New Clark City)