In April 2026, the Philippines joined Pax Silica, the US-led alliance launched in December 2025 to secure the supply chains for AI, semiconductors, and critical minerals.

The pitch to Filipinos is growth and upgrade. Pax Silica will supposedly allow us to move past the low-margin work of assembling, testing, and packaging (ATP) that has dominated our manufacturing exports for the longest time. A 1,618-hectare “Economic Security Zone” in New Clark City would become a “Golden Node” in the network.

This deal sounds good and feels right. But before we celebrate, let’s parse what we’re actually getting.

We could stay stuck at the bottom

First, a basic fact in global value chains is that where you sit in the chain decides how much of the money you earn and keep. Countries that design the semiconductors and own the patents take most of the value. Meanwhile, countries like the Philippines that assemble it or dig up the minerals inside it take meager pickings.

For decades the Philippines has been parked at the lower-value segments of the chain. While Pax Silica promises to change this setup, the risk is it just renames the old arrangement. We bring the land, the labor, the nickel and copper, and a useful location. But our partners bring (and keep) the technology, the intellectual property, the profits.

High-value work like chip design and wafer fabrication don’t materialize simply because a treaty wishes it so. They show up and contribute significantly to the economy only when there’s binding technology transfer and deliberate local supplier development. That has to be written into the Pax Silica deal and not simply assumed.

The data-center mirage

There’s also excitement about hosting AI data centers as part of the network. But there are at least two reasons to be skeptical.

First, huge data centers cost a fortune to build but employ remarkably few people once it’s running. We’d supply the land, the electricity, and the cooling water, but we might pocket just a thin slice of the returns. This could be a potential value-chain trap.

Second, AI data centers devour power and water in a country that is already short on both and dangerously exposed to climate shocks to boot. Add the mining that rare-earth extraction would accelerate, often in fragile ecosystems, and the bill for hosting AI data centers starts to look especially steep. Establishing an “economic security zone” could, in fact, entail gargantuan environmental costs.

Don’t overcorrect on China

The subtext is that the US intends to cut dependence on China. Given Beijing’s bullying in the West Philippine Sea, the urge for the Philippines to join in and de-risk is understandable.

But with Donald Trump at the helm in the US, Washington’s trade and security commitments may become more transactional and less predictable. At the same time, China is no longer just a bully to be shut out. It’s proven to be a serious economic and R&D powerhouse, and it sits at the center of the very mineral processing this alliance depends on.

Notwithstanding our woes in the West Philippine Sea, we have to acknowledge that leaning too hard away from China invites real costs, most especially the loss of trade and technology ties that a developing economy like ours can’t easily replace.

None of this means we should have stayed out of Pax Silica altogether. But we need to pay great attention to the details.

Before anything more is signed, we should demand plain answers on what exactly we agreed to in that special zone, like the governance terms, the immunities, and the lease terms. And we should also insist on binding commitments on technology transfer, local value capture, environmental safeguards, and labor standards.

At minimum, the agreement should include measurable targets for, say, Filipino engineers trained, local suppliers accredited, Philippine firms integrated into higher-value production, and environmental liabilities assigned.

Especially now that the Philippine economy is in the doldrums, the pressure for the administration of President Ferdinand Marcos Jr. to announce big foreign direct investments is enormous. But a rushed and ill-conceived deal could lock us into a subordinate role for at least a few generations.

So by all means, let’s join the future that Pax Silica promises. But we should do so with our eyes open. The Philippines must not become merely a pawn in a global superpower struggle, and merely supply the land, minerals, power, water, and low-cost labor while Donald Trump’s America keeps the technology, patents, profits, and strategic control. – Rappler.com

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Jan Carlo “JC” Punongbayan, PhD is an associate professor at the University of the Philippines School of Economics (UPSE). His professional experience includes the Securities and Exchange Commission, the World Bank Office in Manila, the Far Eastern University Public Policy Center, and the National Economic and Development Authority. JC writes a weekly economics column for Rappler.com. He is also co-founder of UsapangEcon.com and co-host of Usapang Econ Podcast.

His first book, False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them, was published by Ateneo de Manila University Press in February 2023. His second book, Twin Plagues: How Duterte and Covid-19 Wrecked the Philippine Economy, will be published by Penguin Random House SEA in June 2026.  Follow him on Instagram (@jcpunongbayan).

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المصدر: Rappler (PH)