Pax Silica is a U.S.-led coalition launched in 2025 to secure semiconductor and AI supply chains, countering China’s dominance in rare earths and chip manufacturing. Participating Countries from: Japan, Republic of Korea, Singapore, the Netherlands, The United Kingdom, Israel, United Arab Emirates, and Australia, alongside guest contributions from Taiwan, the European Union, Canada, and the OECD. [1]
On April 16, 2026 the Philippines joined the Pax Silica initiative. Under the framework of Pax Silica, the United States and the Philippines also announced their plans to establish a 4,000-acre industrial hub in the Luzon Economic Corridor of the Republic of the Philippines. [2]
In the Philippines, the Bases Conversion and Development Authority (BCDA) has underscored the strategic role of New Clark City as a future hub for artificial intelligence (AI), advanced manufacturing, and digital innovation under the Luzon Economic Corridor (LEC), through the Pax Silica initiative.[3]
Philippine Laws Governing Manufacturing Operations.
- Labor Code of the Philippines[4]
- All employees working in the Philippines must be covered by local labor protections, including minimum wage standards, statutory benefits, and lawful dismissal procedures. Foreign companies operating in the country cannot bypass these obligations, even if employment contracts are drafted under foreign law. Philippine labor law applies territorially, and any attempt to circumvent it exposes employers to legal disputes, administrative sanctions, and potential reputational damage.
- Special Economic Zone Act [5]
- The Pampanga hub will operate under this law, which provides tax incentives and regulatory oversight for businesses in designated zones. Compliance with the Bases Conversion and Development Authority (BCDA) rules is mandatory.
- Philippine tax law [6]
- Corporate income tax, VAT, and withholding taxes apply to operations and employees. The Bureau of Internal Revenue (BIR) requires registration and reporting for companies and workers earning income in the Philippines.
- Environmental laws[7]
- Large-scale industrial projects must comply with the Environmental Impact Statement (EIS) System under the Department of Environment and Natural Resources (DENR). Green tech metals processing will require permits for mining, waste management, and emissions.
- Foreign Investment Act[8]
- Foreign ownership is generally allowed in manufacturing, but restrictions exist in certain industries. Registration with the Board of Investments (BOI) or Philippine Economic Zone Authority (PEZA) may be required for incentives.
ABO and PEÑARANDA Law Firm provides comprehensive advisory services to foreign and domestic investors, as well as registered business enterprises, on matters of labor, incentive eligibility, investment structuring, and compliance with the Philippine investment incentives framework. The firm’s expertise covers navigating the Special Economic Zone Act (RA 7916), the CREATE Act (RA 11534), and related fiscal and regulatory regimes, ensuring that clients maximize available benefits while adhering to statutory obligations.
[1] Pax Silica Summit – United States Department of State
[2] The United States and The Philippines Launch Plans for 4,000-Acre Economic Security Zone to Shore Up Supply Chains: First AI-Native Industrial Acceleration Hub Under Pax Silica – United States Department of State
[3] New Clark City positioned as AI, advanced industry hub – Pampanga News Now
[4] Presidential Decree No. 442, AS AMENDED
[5] The Special Economic Zone Act of 1995” (Republic Act No. 7916).
[6] Republic Act No. 8424, otherwise known as the Tax Reform Act of 1997, as amended by subsequent laws such as the TRAIN Law (Republic Act No. 10963) and the CREATE Act (Republic Act No. 11534).
[7] ENVIRONMENTAL LAWS AND POLICIES ON WASTE & POLLUTION Philippine Sanitation Code (Presidential Decree No. 856); Philippine Clean Water Act of 2004 (Republic Act No. 9275: The Philippine Clean Water Act of 2004); Ecological Solid Waste Management Act of 2000 (Republic Act No. 9003) ; Philippine Clean Air Act of 1999 Republic Act No. 8749
[8] The Foreign Investment Act of 1991, also known as Republic Act No. 7042,
