THE Philippines needs to tie Luzon Economic Corridor (LEC) investments to measurable commitments on local procurement, jobs and technology transfer to ensure domestic businesses benefit from the initiative, according to a study published by the Philippine Institute for Development Studies (PIDS).
Researcher Jenny D. Balboa warned that foreign companies and export-oriented supply chains could receive a disproportionate share of the economic gains unless Filipino micro, small and medium enterprises (MSMEs) are integrated into corridor projects.
The study cited a 2024 report placing the estimated cost of 12 priority projects at ₱2.126 trillion, or approximately $36 billion. The figure describes the project pipeline rather than committed or disbursed financing.
Established during the April 2024 Philippines-Japan-US trilateral summit, LEC aims to connect Subic, Clark, Metro Manila and Batangas through transportation, logistics, energy, digital and industrial investments.
According to the study, the corridor could support 137 economic zones accounting for 57 percent of Philippine exports, based on Philippine Economic Zone Authority data.
However, the scale of the proposed investments does not by itself establish how much domestic enterprises and workers would gain.
Balboa recommended linking investor incentives to verifiable commitments on employment, skills development, technology transfer and participation by Filipino businesses. Local procurement provisions could help connect domestic firms to the emerging supply chains.
Without long-term workforce development and professional certification, the study warned, employment could remain temporary, low-skilled or low-paying.
Financing transparency is another concern. Publicly available information generally provides broad estimates and indicative schedules, with limited access to exact financing conditions, procurement details and implementation timelines.
Balboa recommended publishing these documents alongside environmental and social safeguards to strengthen oversight and reduce corruption risks.
The study rated the Philippines’ bargaining leverage as moderate and institutional capacity as uneven, while the corridor’s local economic impact remained uncertain.
Lower Philippine financial participation could reduce fiscal exposure, but it could also limit the country’s influence over project design and implementation, Balboa said. She proposed selective co-investment through development banks and government-owned or -controlled corporations, provided it would not create additional fiscal burdens.
The corridor also provides a potential infrastructure base for investments associated with Pax Silica, a US-led initiative covering strategic supply chains in critical minerals, semiconductors, advanced manufacturing and artificial intelligence.
The study discussed plans for a 1,619-hectare AI industrial hub in New Clark City and a July 2026 agreement designating the Port of Subic Bay as the preferred maritime gateway for Pax Silica operations within LEC.
These initiatives could complement the corridor’s transport and logistics investments, but require coordinated planning and clear implementation arrangements.
Balboa recommended diversified financing through Japanese official development assistance, multilateral development banks and private investors. Phased implementation, an independent coordination secretariat and a unified master plan could help manage funding and coordination risks.
The assessment was published on Nov. 3 in a PIDS volume marking the Philippine APEC Study Center Network’s 30th anniversary.| BNN Integrated News
