[In This Economy] Examining the Risks of Pax Silica for the Philippines

The Philippines officially joined Pax Silica in April 2026, aligning with a US-led coalition designed to secure critical supply chains for AI, semiconductors, and essential minerals. The initiative, launched in December 2025, aims to transform the country's manufacturing landscape.

However, the benefits of this membership are not guaranteed. Experts warn that without stringent commitments on technology transfer and local supplier development, the country may remain trapped in low-margin manufacturing.

The Value Chain Dilemma

Historically, the Philippines has occupied a low-value position in the global value chain, primarily focusing on assembly and packaging. This pattern risks perpetuating itself under Pax Silica unless the agreement includes specific mechanisms for local value capture.

High-value work like chip design and wafer fabrication don’t materialize simply because a treaty wishes it so.

JC Punongbayan, Economist

The proposed Economic Security Zone in New Clark City, touted as a 'Golden Node,' could become a site for growth. Yet, the promise of advanced manufacturing hinges on whether local companies can engage in higher-value production.

Environmental and Economic Concerns

There are also environmental implications tied to hosting AI data centers, which could significantly strain the Philippines' already limited resources. The trade-off of providing land and utilities for minimal returns raises questions about the long-term sustainability of such projects.

Moreover, as the US seeks to reduce dependence on China, the Philippines must navigate a delicate balance. While distancing itself from Beijing, the nation risks compromising its trade relationships and technology access.

The Need for Caution

Before fully committing to Pax Silica, stakeholders must demand clarity on governance, immunities, and environmental safeguards. Setting measurable targets, such as training Filipino engineers and integrating local suppliers, will be crucial.

As the Philippine economy faces challenges, the pressure to attract foreign investments intensifies. However, a hasty agreement could lock the nation into a subordinate economic role for generations to come.

The Philippines' participation in Pax Silica could usher in a new era of growth, but it must proceed with caution to avoid becoming merely a pawn in the geopolitical chess game between superpowers.

The Philippines is also looking to enhance its digital infrastructure. The DICT Seeks US Investment for digital infrastructure growth.

This initiative aims to bolster the country's technological capabilities and attract more foreign investments.