A pipeline of 12 priority projects under the Luzon Economic Corridor (LEC), estimated to cost over ₱2.1 trillion in 2024, faces financing transparency gaps and risks leaving Filipino businesses behind unless stronger safeguards are put in place, according to a study published by state-run policy think tank Philippine Institute for Development Studies (PIDS).
The study warned that limited public access to financing terms, procurement details, and project timelines could weaken accountability, while foreign companies and export-oriented industries could capture a disproportionate share of the economic benefits from the infrastructure initiative backed by Japan and the United States (US).
These concerns were raised by researcher Jenny D. Balboa in a chapter of the book “Contemporary Philippine Issues and Emerging Asia-Pacific Economic Cooperation (APEC) Priorities: The Philippine APEC Study Center Network 30th Anniversary Volume,” published last Tuesday, Nov. 3.
Balboa, a lecturer at Hosei University and Tokyo University of Foreign Studies in Japan, conducted a qualitative assessment of the trilateral infrastructure partnership based primarily on publicly available government information, academic papers, and news reports.
The research cited a 2024 report that the Department of Economy, Planning, and Development (DEPDev) had identified 12 priority projects under LEC with an estimated combined cost of ₱2.126 trillion, or approximately $36 billion, rather than financing already secured or disbursed.
Launched during the first Philippines-Japan-US trilateral summit in April 2024, LEC aims to connect Subic, Clark, Metro Manila, and Batangas through investments in transportation, logistics, energy, digital connectivity, and industrial infrastructure.
However, Balboa found that publicly available information generally provides only broad financing estimates and indicative implementation schedules.
“In reality, however, basic information such as exact financing terms and project timelines is not easily accessible to the public,” the study said.
The research noted that media reports on projects such as the proposed Subic-Clark-Manila-Batangas (SCMB) Railway System often discuss funding approvals and technical studies without specifying financing conditions, interest rates, repayment schedules, or firm construction timelines.
Balboa said these disclosure gaps were particularly concerning amid controversies involving allegedly anomalous government infrastructure projects, including flood-control works.
“Although these scandals are not directly related to the LEC, they reflect broader public concerns about transparency, documentation, and accountability in infrastructure projects,” the study said.
The researcher recommended publicly disclosing financing terms, procurement rules, implementation schedules, and environmental and social safeguards to reduce corruption risks and strengthen project oversight.
Beyond transparency, Balboa warned that major foreign companies and export-oriented supply chains, particularly those involved in semiconductors, manufacturing, and logistics, could benefit disproportionately from LEC unless Filipino micro, small, and medium enterprises (MSMEs) are integrated into the projects.
The study recommended incorporating local procurement provisions and linking incentives granted to investors to measurable commitments involving job creation, skills training, technology transfer, and participation by domestic businesses.
Balboa also found insufficient evidence that local government units (LGUs), MSMEs, and grassroots communities were systematically integrated into LEC’s planning, despite its broad alignment with national development priorities.
In its governance assessment, the study rated LEC’s goal alignment as partial, transparency as mixed, and the Philippines’ bargaining leverage as moderate. Institutional capacity was considered uneven, while the initiative’s local economic impact remained uncertain.
The assessment identified gaps in local implementation capabilities, corridor management, environmental and social safeguards, and operations and maintenance (O&M) arrangements, alongside potential risks involving displacement and unequal distribution of economic benefits.
Another concern involves the Philippines’ relatively limited financial participation in the initiative compared with Japan and the US.
While lower Philippine co-investment could reduce fiscal exposure, Balboa cautioned that it might weaken the country’s influence over project design, implementation, and oversight.
The researcher suggested selective co-investment through development banks and government-owned and/or -controlled corporations (GOCCs), provided these investments would not impose additional fiscal burdens.
The study also warned that employment generated by LEC could remain temporary, low-skilled, or low-paying without provisions for long-term workforce development, professional certification, and technology transfer.
LEC’s infrastructure program includes a proposed freight railway linking Subic, Clark, Metro Manila, and Batangas, alongside improvements to ports, expressways, industrial facilities, and energy infrastructure.
According to the study, LEC could support 137 economic zones accounting for 57 percent of Philippine exports, based on data from the Philippine Economic Zone Authority (PEZA).
The initiative also encompasses emerging investments in advanced manufacturing and digital technologies, including plans for a 1,619-hectare (ha) artificial intelligence (AI) industrial hub in New Clark City in Tarlac province under the US-led Pax Silica initiative.
Launched in December 2025, Pax Silica seeks to strengthen strategic supply chains involving critical minerals, semiconductors, advanced manufacturing, AI, and related infrastructure.
The Philippines joined Pax Silica in April 2026, announcing plans for the AI-focused industrial hub within LEC, according to the study, citing the Board of Investments (BOI) and the US Department of State (DOS).
Balboa discussed Pax Silica as a complementary initiative that could strengthen LEC’s role in strategic technology supply chains, with the corridor providing the transportation, logistics, and industrial infrastructure needed to support related investments.
In July 2026, state-run Bases Conversion and Development Authority (BCDA) and Subic Bay Metropolitan Authority (SBMA) agreed to designate Port of Subic Bay as the preferred maritime gateway for Pax Silica operations within LEC.
Citing BCDA and SBMA’s agreement, the study said the arrangement covers logistics, cargo handling, import and export operations, and assessments of infrastructure and connectivity requirements.
In the energy sector, the research cited a $2.7-million US-funded feasibility study (FS) involving Manila Electric Co. (Meralco) to explore nuclear power development as part of efforts to strengthen the country’s energy security.
Apart from domestic governance concerns, Balboa identified potential disruptions arising from shifts in US government policies and funding priorities, Japan’s fiscal constraints and bureaucratic processes, and coordination challenges among the three countries.
The study recommended diversifying financing through Japanese official development assistance (ODA), multilateral development banks (MDBs), and private-sector investments, alongside phased implementation and more flexible project arrangements.
Balboa also proposed an independent LEC coordination secretariat, a unified infrastructure master plan, and civil society participation to strengthen coordination and monitoring.
The researcher stressed that LEC should remain focused on economic development rather than being framed primarily as a strategic response to China, given the Philippines’ continuing trade and investment ties with its Asian neighbor.
“The LEC initiative should maintain a development-oriented approach. It is important to assert that the LEC is a civilian infrastructure for economic development and resilience,” Balboa said.
