Pax Silica not in proposed 2027 budget as economic managers say nothing final yet

Sam Calleja/Rappler

If it pushes through, Pax Silica's lease income is expected to 'far outweigh' the costs of managing the proposed New Clark City hub, according to Finance Secretary Frederick Go

AT A GLANCE

• The Marcos administration has not allocated funding for the Pax Silica industrial hub in the proposed 2027 budget.
• Economy Secretary Arsenio Balisacan emphasized the importance of attracting industries that create better-paying jobs.

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MANILA, Philippines – The Marcos administration has not allocated money for the planned Pax Silica industrial hub in the proposed 2027 national budget, with economic managers stressing that the project remains in preliminary discussions and no final agreement has been signed.

Finance Secretary Frederick Go made the clarification during House deliberations on the proposed 2027 budget after Gabriela Representative Sarah Elago asked whether government agencies had set aside funding for the United States-led initiative.

“There’s nothing in the budget that will spend for this proposed industrial hub because nothing has been signed,” Go said on Monday, August 17. “It’s still a discussion.”

Acting Budget Secretary Kim Robert de Leon also confirmed that there is no allocation in the National Expenditure Program intended for Pax Silica. He clarified that the increase Elago cited under the Department of Information and Communications Technology is for implementation of the government’s e-government mandate, not the proposed hub.

Pax Silica is a US-led initiative aimed at strengthening supply chains for technologies ranging from critical minerals and semiconductors to advanced manufacturing and artificial intelligence.

The Philippines joined the initiative in April, with plans being discussed for a roughly 4,000-acre industrial and innovation hub in New Clark City in Tarlac, though no detailed agreements governing the proposed project have been signed.

Go said that if the New Clark City development eventually proceeds, the Bases Conversion and Development Authority (BCDA) should earn more from the project than it spends managing the property.

“They will pay us rent. So it is a revenue-enhancing project,” Go said. He later added that “the revenue should far outweigh any project management expense like in any other real estate venture.”

The BCDA earlier said it would grant a two-year grace period on lease payments as an in-kind Philippine contribution to the initiative, with rental rates from the third year onward to be determined under a subsequent agreement. The final commercial terms have yet to be negotiated. 

Why government wants Pax Silica

The attraction for the Philippines is the possibility of moving beyond its traditional reliance on consumption and services toward higher-value manufacturing.

At the Economic Journalists Association of the Philippines forum, Economy Secretary Arsenio Balisacan said the country needs to diversify its sources of growth by generating more investment and exports, while rebuilding industry and revitalizing agriculture. He noted that the Philippine economy had behaved like a richer economy dominated by services even before developing a sufficiently deep industrial base.

Balisacan said the country still has an opportunity to industrialize, particularly by attracting industries that raise productivity and create better-paying jobs. He also highlighted the importance of worker upskilling as AI and other emerging technologies reshape the economy.

During the budget hearing, Balisacan said Pax Silica could fit that strategy if it succeeds in attracting advanced technology industries such as semiconductors and electronics.

“That is very consistent with what I was saying earlier that we need to attract industries that bring the quality of jobs higher,” he said.

The BCDA has projected that the New Clark City development could eventually attract $40 billion to $70 billion in investment and generate more than 130,000 high-quality jobs, although these remain government projections for a project that has yet to be finalized.

The potential gains also come with large requirements. Government officials have acknowledged concerns surrounding power and water demand, environmental impact, and indigenous peoples’ rights, while the Department of Energy has said the project must not leave the rest of the country at a disadvantage as it secures the substantial electricity supply required by an advanced manufacturing hub. (READ: Why Energy Secretary Garin says Pax Silica is ‘too dangerous’ to plug into grid) – Rappler.com