Predictable rules, reliable power needed for Philippines to seize manufacturing boom
EM - News Moderator 
By Beatriz Marie D. Cruz, Senior Reporter
THE PHILIPPINES must ensure regulatory predictability and secure reliable power and water to effectively position itself as a major manufacturing hub, according to executives of global management consulting firm Kearney.
“We believe that the Philippines, while perhaps not as strong as Vietnam and others, has a track record of success in manufacturing. So, it’s proven that we can play in this particular space,” Kearney Philippines Country Head Marco de la Rosa said in an interview with BusinessWorld last week.
Mr. de la Rosa said that the Philippines must diversify its revenue streams as its key growth drivers — particularly the business process outsourcing sector — face growing uncertainties from artificial intelligence (AI)-related disruptions.
Mr. de la Rosa noted that the country’s inclusion in the Washington-led Pax Silica has opened a rare opportunity for the Southeast Asian nation to become a key player in digital infrastructure and semiconductor manufacturing.
“The geopolitics have all come together to create an opportunity for the Philippines to play a distinctive role in this industry through Pax Silica, as well as the global digital infrastructure industry,” he said.
“We cannot miss this boat. This is a once in a lifetime opportunity that the Philippines needs to take advantage of.”
In April, the Philippines joined Pax Silica, a coalition of 24 signatory countries seeking to establish a framework to create partnerships in chip manufacturing, AI hardware, and data centers.
Under the Pax Silica framework, Manila and Washington are building a 1,619-hectare AI-native acceleration hub in New Clark City, Tarlac, to produce critical components for global AI infrastructure.
However, the Pax Silica initiative faces growing backlash due to concerns over its heavy energy and water requirements, potential environmental impact, and the possible displacement of local farmers.
Amid the need to attract investors while addressing public concerns, high-tech industrial developments like Pax Silica must guarantee policy predictability and transparency, said Shigeru Sekinada, Kearney region chair for Asia-Pacific, and chairman for Japan.
These include enforcing clear rules, cutting red tape, reducing logistics costs, and ensuring accessible and affordable water and power supply.
The Philippines and the US are in talks to create the long-term framework governing the Pax Silica hub in Tarlac, which both sides plan to finalize this year.
Citing his recent talks with multiple chief executive officers (CEOs) during Kearney’s CEO Retreat in Bangkok, Thailand last June, Mr. Sekinada said that key leaders are actively seeking manufacturing options across the region.
“Some of the participants mentioned that Southeast Asia and the Philippines might be the place to have more manufacturing business,” he told BusinessWorld.
The CEOs also said that “maybe Japan and some countries have more capability in AI, data centers, semiconductors, and so on,” Mr. Sekinada also said.
With this, Kearney noted that external headwinds like the global oil crisis and geopolitical developments provide opportunities for the Philippines to capture investment in sectors like high-value manufacturing.
“In this context, I think that there is an opportunity for the Philippines to have more investment,” Mr. Sekinada said.
“But it’s very important to have predictability consistent in the policy at the national level, but another important factor is reliability with specific partner companies here,” he added.
Opportunities to develop the Philippines as a key player in semiconductor manufacturing would also help build an ecosystem of jobs and real estate developments, Mr. de la Rosa said.
“Once you start having these communities build and income increases in a particular sector, it then attracts more foreign direct investment, while other new sectors and industries can start to come and grow around it,” he said.
However, the Philippines continues to lag from its Southeast Asian neighbors in attracting foreign direct investments (FDIs).
The country slipped two spots to 18th out of 25 emerging markets in Kearney’s 2026 FDI Confidence Index, trailing behind peers like Thailand (6th), Malaysia (7th), Indonesia (13th) and Vietnam (16th).
Mr. de la Rosa noted that the country’s score in the index was based on key factors like infrastructure, talent pool, and legal frameworks.
“Our neighboring countries won’t stand still. We’re all sort of competing for the same investment dollars. So, the trick is to ensure that the Philippines gets its fair share of investments relative to the capabilities and potential that we have,” he said.
