Alex Eala stirs Pinoy pride because she’s a genuinely Pinoy tennis powerhouse. Eala is real Filipino talent, developed through years of hard work, training and competition, and whose success truly raises the level and possibilities of Philippine tennis. On the other hand, American Justin Brownlee of local basketball team Barangay Ginebra San Miguel is a gifted player who doesn’t stir the same pride. Like so many imports before him, his excellence strengthens a local team but doesn’t really develop Philippine basketball capability. Spot the difference?

Pax Silica is being hyped as a high-tech artificial intelligence (AI)-driven semiconductor jackpot for the Philippines. The winnings are taken for granted and the debate has shifted towards the price paid. How much land, water and energy are used, and how many farmers and Aeta are displaced? How destructive will mining be?

These are urgent questions made harder to answer because of the government’s lack of transparency about its Pax Silica efforts—whether because the plans are still vague, because they are more promise than reality, or probably a bit of both. But there’s an even more basic question that has barely been asked: What if the promised industrialization isn’t even ours?

Sometimes it’s the most obvious things that are missed. In all the talk about what Pax Silica will bring to the country, it’s assumed that what’s good for foreign firms and the United States (US) is also what’s good for Filipino firms and Philippine development.

Unfortunately, that’s not true, and understanding this changes everything: Pax Silica may bring higher-tech industry to the Philippines without actually industrializing the Philippines—and will even get in the way of real Filipino industrialization.

Facts Mythica

Before anything, it’s important to get as clear as possible about available basic facts on Pax Silica in the Philippines. What do we know so far?

The Philippine segment of the US’s global Pax Silica appears to be among the most concretely developed to date. The US State Department, for instance, calls the proposed Economic Security Zone (ESZ) in New Clark City a “new model” and the “first of its kind” for similar Pax Silica investment hubs elsewhere—effectively making the Philippines a pilot for its model of globally-linked zones. The country isn’t just hosting an industrial hub but, it seems, is also an institutional test bed where a new investor governance regime is being worked out.

The effort is still in its early stages with very little information released. Even so, some general contours are already emerging – extraction of critical minerals, likely expansion of semiconductor assembly, test and packaging (ATP) operations, possible data centers in the hub or elsewhere, and supporting logistics, energy and water infrastructure – all under a foreign capital-biased investment regime. The government will allow rent-free use of 1,619 hectares of land, grant an income tax holiday of at least 6-7 years with deductions or lower taxes for up to 27 years, give VAT exemptions, allow duty-free imports, and other incentives.

Some exaggerations are also already emerging. The Marcos Jr administration throws spectacular numbers in the air to justify signing onto the US’s Pax Silica initiative – up to US$40-70 billion in investments, US$200 billion in exports, 990,000 direct and indirect jobs, and billions in tax revenues and leasing income.

These numbers are dubious. With barely anything beyond a concept note, Malacañang is basically claiming that Pax Silica alone will quintuple foreign manufacturing investment (from US$18.8 billion as of 2025), quintuple electronics exports (from US$45.9 billion as of 2025), and create more jobs than the entire economy has been able to manage in the last four decades (averaging net employment creation of just 730,000 annually since 1986).

As it is, the supposed Pax Silica project pipeline remains thin and tentative. To drum up support, a handful of projects have been announced covering the embryonic New Clark City ESZ, some logistics, aerospace and infrastructure investments, several proposed energy and connectivity projects, and critical minerals agreements that are mostly frameworks for future cooperation rather than concrete investments.

Which is why now is the best time to unpack the Pax Silica industrialization and development promises.

Warranted skepticism

All the glowing promises bathed in a high-technology aura are hypothetical, but the obsolete “free market” development model behind them isn’t. Unfortunately, the Philippines has a long and continuing history of problems with grossly exaggerated gains from foreign investment in the country. The world’s biggest foreign capitalists have pushed liberalization, privatization and deregulation for 50 years to make countries like us better places for them to invest and profit, not to help us industrialize and develop.

We don’t need to guess what foreign-driven high-tech industrialization looks like because we’ve been trying it for over half a century now. Despite large foreign manufacturing investment, Philippine manufacturing is down to historic lows. The stock of manufacturing foreign direct investment (FDI) has grown 12-fold in the last 35 years, from US$1.6 billion in 1990 to US$18.7 billion in 2025.

Yet over that same period, the share of manufacturing in the economy has fallen from 25.5% of gross domestic product (GDP) to 17.3% in 2025, which is the lowest in nearly 80 years or since 1949. The share of manufacturing in employment has also fallen from 10.1% to 7.1%, which is the lowest since at least as far back as 1960, according to records at hand.

Our experience with American firm Intel is a cautionary tale. The Philippines was at the forefront of semiconductor pioneer Intel’s early overseas expansion, hosting its second foreign plant in Makati in 1974. Over the next 35 years, it invested US$1.5 billion in the country, employed up to 1,800 workers, and by 2008 reportedly accounted for up to US$5 billion of the country’s electronics exports. When Intel packed up and left in 2009, the country had no real Filipino electronics industry to speak of, with Intel guarding even its aging technologies.

American firm Texas Instruments (TI) started its Philippine operations in 1979 and is the biggest semiconductor firm in the country today. TI may have already invested as much as US$2-2.5 billion in its Baguio City and Clark Freeport Zone, Pampanga operations. Yet after nearly 50 years, it remains concentrated in low value-added ATP with no upgrading into wafer fabrication or chip design.

The Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) reports 355 members including not just semiconductor firms but also “allied and support industries [and] academe.” However, the number of semiconductor companies is probably much smaller with government statistics reporting just 133 electronics manufacturing establishments in the country employing 154,000 workers; these figures include non-semiconductor establishments, and a company can have more than one establishment.

Given the advanced nature of the technology, it’s safe to assume that the most significant semiconductor firms are those making their way into the country’s Top 1,000 corporations. As of 2024, there are just 33 semiconductor companies in the country with Php679.9 billion in combined revenues—97.1% of this is accounted for by 31 foreign firms, with just the five biggest taking up nearly three-fifths (59%) of the total.

In short, after half a century of making semiconductors in the Philippines, we still don’t really have a Filipino semiconductor industry; we have foreign semiconductor firms operating in the Philippines. There is barely any Filipino ownership of the industry, little movement even into the low value-added ATP segment, and certainly none towards its commanding technologies. “The Philippines” exporting advanced technology doesn’t mean Filipino firms, it means foreign firms producing in and exporting from the country.

These sectoral trends track a larger pattern of foreign investment without development in the economy. The stock of FDI in the Philippines reached over US$133 billion in 2025, a hundred-fold increase from just US$1.3 billion in 1980 while rising from 3.5% to over 27% of GDP. Despite the huge increase in foreign investment, which successive administrations have been over-eager to attract, IBON estimates that over half of Filipino families, comprising three-fifths of the population, remain poor and vulnerable, with millions more in precarious lower middle-class circumstances.

This brings us to a critical point routinely overlooked in discussions of investment and development – the nationality of investment matters, and foreign investment can’t substitute for national industrialization policy.

Nationality matters

There’s a simple rhetorical trick behind all the Pax Silica excitement, i.e. set up a foreign-owned high-tech factory or an AI data center on Philippine soil and suddenly we are high-tech manufacturers and AI producers.

But the “we” isn’t really us. Pax Silica-driven American and other foreign investors locating in the country will own the factories and technologies, will make all the strategic decisions, will capture all the profits, and will be building the capabilities to keep producing things better. This isn’t development, it is providing the address for someone else’s industrialization.

Why does the nationality of firms and of capital matter so much? Nationality matters because Filipino ownership matters to capture the gains from economic activity in the country. Beyond mere geographic location, the nationality and ownership of investment determines who controls the firm, who has and who builds technology, and whose economy accumulates productive capacity and wealth.

Foreign firms bring potentially useful capital, technology and markets, as domestic cheerleaders always highlight. But decades of foreign investment enclaves shows how they operate through global networks and ultimately make investment, sourcing, technology and production decisions according to their own corporate interests—and not what develops the Philippines which is just another location for them.

In contrast, Filipino firms are more likely to buy from and work with other local enterprises, reinvest and accumulate capital here, develop technologies suited to local needs, and create wider employment and income gains, because their businesses are rooted in the domestic economy. More than foreign investors, Filipino firms should be the primary recipients of government protection, promotion, and support.

This isn’t just speculation. For instance, summarizing decades of development policy, the United Nations Conference on Trade and Development (UNCTAD) put the importance of national industrialization plainly: “A strong and sustained investment drive by national elites [has been] a defining feature of successful development episodes [and the creation of a domestic industrial base].”

It’s also strongly confirmed today when even the world’s largest and most powerful country declares “America First” in trade and investment policy.

Neocolonial asymmetry

This leads to the irony at the heart of Pax Silica hidden in plain sight: the US wants American reindustrialization, while the Philippines wants to cosplay industrialization by hosting foreign industrial investors.

The US is unabashedly pursuing national industrial power as a matter of national security, and Pax Silica is its spear tip because semiconductors and AI are seen as the most important technologies determining economic and military power for the indefinite future. The complexity of the technology and the availability of raw materials make global supply chains unavoidable, and the US has been able to get 25 countries to join Pax Silica to date. But it is also clear that the US wants these supply chains ultimately anchored around the US economy, monopolizing the most advanced chip design, while bringing more production within its borders.

To do this, the US has abandoned much of the free-market orthodoxy that it promoted abroad for decades. The US government’s protectionist industrial policy is far-reaching and started at least as early as 2008/2009. It imposes tariff barriers and controls technology exports, provides subsidies and cheap capital, directly invests in strategic firms and technologies, restricts foreign investment, wields government procurement to favor domestic production, and mobilizes public infrastructure, research and finance to reindustrialize the domestic economy. And, as ever, it zealously protects US intellectual property, especially the advanced technologies underpinning its economic and military dominance.

In short, the US is not leaving industrial development to a textbook “free market” and aggressively uses state power to shape what is produced, where it is produced, who produces it, and who controls the technologies. Pax Silica itself is economic statecraft, tellingly led by the US State Department rather than Commerce or the Office of the US Trade Representative (USTR). This underscores how the US now deploys industrial and technological policy in pursuit of broader geopolitical objectives.

In contrast, the Philippines is doing exactly the opposite. Instead of using state power to build Filipino firms and technologies, the Marcos Jr administration, like those before it, obsequiously opens up the economy. It offers up cheap land, labor and natural resources, gives fiscal incentives and infrastructure, and relaxes restrictions on foreign capital to make the country as attractive as possible to foreign investors. It protects and promotes foreign capital in the vain hope that foreign industry will somehow become ours.

The asymmetry goes deep. Pax Silica is embedded in an expanding architecture of US-Philippine defense industrial cooperation with Bilateral Defense Guidelines (2023), Security Sector Assistance Roadmap (2024), a military information agreement (2024), Joint Vision Statement on Defense Industrial Cooperation (2025), and a critical minerals agreement (2026). Pax Silica isn’t just economic policy but part of a much larger US strategic project for the Philippines.

The contradiction is particularly stark in the proposed ESZ. The US describes “joint governance” and how the “US and the Philippines plan to oversee [its] use and long-term industrial buildout,” and how it will combine “American expertise in institutions and legal regimes” with Philippine workers, minerals, energy resources, and strategic location.

The sovereignty question is obvious. Why should the US have any role in governing an industrial zone on Philippine territory and shaping its long-term industrial development? The Marcos Jr administration agreeing to this is a bizarre subordination of the country’s development priorities and regulatory authority to the requirements of US national security, geopolitical priorities, and industrial policy.

The signs are clear that the US wants exceptional institutional guarantees and investor protections. Both sides backtracked on the controversial demand for diplomatic immunity. But while final arrangements are still being negotiated, it is already clear that the US wants stronger protection and control, greater freedom to operate, and better incentives than current Philippine foreign investment laws allow.

The Marcos Jr administration’s deference is among the clearest markers that it does not have an independent plan for Filipino industrialization. Instead of ensuring that foreign capital serves the country’s development priorities, the Marcos Jr administration is shaping those priorities according to the strategic needs of the US. The alternative starts with turning that relationship on its head.

Filipino First

The alternative starts with asking the right question. It’s not how to make high-tech foreign investment come to the Philippines but how to make foreign investment a genuine tool for Filipino industrialization and development.

The policies for doing this are well-established in the economic history of the original imperialist powers, other industrial capitalist countries, Socialist economies, East Asian development states, and virtually every country that has made any kind of industrial progress.

For instance, in the Philippine Pax Silica framework agreement supposedly to be signed in November, the Marcos Jr administration could assert a few basic principles. We will favor Filipino firms and protect infant industries. We will insist on Filipino ownership and joint ventures. Foreign investors will be required to transfer technology and source more inputs domestically. Government procurement will be used to develop Filipino producers. We will uphold the rights of Filipino workers and enforce strict environmental safeguards. We will decide which foreign investors can operate in the ESZ, Luzon Economic Corridor (LEC), and elsewhere. And we will trade and cooperate technologically with whichever countries we deem best to advance Philippine development.

Pax Silica may yet bring more factories, exports, investment and high-tech jobs, but, given the Philippine government’s outdated economic policies, this is just providing the address for the industrialization of the US and other foreign countries. We’ve been hosting foreign investors for decades, and it is long past time to stop confusing their industrialization with ours. Our land, labor, natural resources and public funds should first and foremost be used to build Filipino industries, technology, and productive capacity.

The shiny cutting edge high-tech Pax Silica may indeed be different this time. Unfortunately, the way things are going, it will be different in the sense of a new level of dependence and making real Filipino industrialization even harder.