What happened
In April, the United States put forward a plan for a 4,000-acre high-tech manufacturing zone in New Clark City, a planned city north of Manila. It would focus on semiconductors, artificial intelligence and advanced production. Manila is offering the site as an Economic Security Zone.
The zone sits within Washington's Pax Silica programme. The Bases Conversion and Development Authority (BCDA), the state body developing New Clark City, estimates it could attract $40 billion to $70 billion and generate upward of 130,000 skilled jobs. Critics argue the price could be a loss of sovereignty. Property Report published the analysis on 8 October 2026.
What Pax Silica is
The initiative launched last December. Its aim is to compete with China for critical minerals and artificial intelligence, building supply chains with friendly nations. Roughly two dozen countries have signed up, including Japan, Australia and South Korea, along with Kazakhstan, which also belongs to a rival Chinese coalition.
The Philippines became the 13th member in April. The US State Department describes the country as a close treaty ally with strong skills in chip and electronics manufacturing, and calls the New Clark City site the first of its kind.
An economy short of investment
Supporters say the deal could transform a weak economy. Second quarter 2026 GDP was up just 2.3% on a year earlier, and industrial output shrank 2.4%. The World Bank projects 3.7% growth for the year, citing soft investor sentiment, a drop in fixed investment and a decline in FDI.
President Ferdinand Marcos Jr. says the project will create good jobs and make industry more competitive, and that the hub will anchor the Luzon Economic Corridor. The BCDA estimates it could eventually produce $200 billion in exports and up to 190,000 direct jobs. The investment involved could equal about a tenth of national GDP.
The sovereignty debate
In return, Washington has made requests that critics find troubling. The most controversial was diplomatic immunity for people linked to the zone, which Philippine officials say they refused. The US also wants a joint say in setting the hub's industrial priorities.
Under the US terms, Pax Silica members would be barred from joining competing pacts with China. In August, Senator Imee Marcos publicly questioned why control was being handed to foreigners. Sonny Africa, executive director of the research group IBON Foundation, warned the country could end up as a production base without ever becoming a true high-tech economy.
MAP, a leading Philippine business association, backs the plan but wants safeguards on technology transfer, environmental standards, local skills and national interests. Arnaud Leveau, who heads the Asia Centre think tank in Paris, called the immunity refusal an encouraging sign, while cautioning that sovereignty issues tend to resurface through tax, data access and procurement rules.
What comes next
Formal negotiations with Washington are due in the coming months. The president faces public pressure over living costs, inflation and low wages, and his trust rating dropped to a record low of 34% at the end of June, mainly over these issues. That pressure may leave Manila less able to walk out of the deal.
What it means for Bali
Other Southeast Asian countries competing for manufacturing investment also use special zones with their own rules. In Indonesia these are called KEK (kawasan ekonomi khusus), and one operates on Bali, in Sanur.
Indonesia likewise tightly regulates foreign participation, including in land and property: freehold title (hak milik) is closed to foreigners, who most often take long-term leaseholds. Indonesia and Bali are not mentioned in the Philippine report.