US ties Philippine economic aid to Indo-Pacific security goals

Speaking at a US House Foreign Affairs Committee hearing last week, USTDA Deputy Director Thomas Hardy stated that agency-backed projects in the Philippines support US defense priorities.

Hardy noted that the USTDA works closely with the US Indo-Pacific Command (USINDOPACOM) to advance American interests in the region’s “frontline states.”

“This ensures that we’re investing in critical infrastructure projects that will support the economic development of the Philippines while also serving strategic US national security interests,” Hardy said.

At the forefront of these initiatives is the feasibility study for the proposed Subic-Clark-Manila-Batangas (SCMB) railway. The USTDA earlier awarded a $3.8 million technical assistance contract to the Virginia-based consultancy firm Cadmus Group to handle preparatory work for the project.

The 250-kilometer SCMB cargo railway is expected to become the logistics backbone of the Luzon Economic Corridor (LEC), an economic partnership between the Philippines, the US, and Japan aimed at boosting connectivity across Luzon’s major industrial hubs.

Once operational, the railway will transport critical minerals directly to the Port of Subic Bay, where the US is already funding upgrades for dry dock facilities.

In tandem with these infrastructure plans, the USTDA awarded a $1 million grant to local mining firm Eramen Minerals Inc. to assess the viability of a nickel processing facility in Zambales. The facility is projected to produce roughly 20,000 metric tons of refined nickel and cobalt annually to serve as precursor materials for battery production.

As part of the LEC framework, the USTDA is also funding a new feasibility study to revive the long-delayed Sangley Point International Airport (SPIA) project, located west of the Ninoy Aquino International Airport (NAIA).

“There remain challenges with our supply chains, and that’s the role of us is to be investing in these infrastructures to make sure that our connections are better with our partners and allies around the world,” said Hardy.

The US is positioning like-minded allies within its supply chain network as part of its efforts to reduce dependence on China, particularly when it comes to inputs needed to develop systems that support artificial intelligence (AI).

Earlier, the US welcomed the Philippines as the 13th member of its Pax Silica initiative, which aims to bring allied economies together to secure the global supply chain for AI.

In line with this, the Philippines is partnering with the US to develop a first-of-its-kind AI industrial hub in New Tarlac City in Tarlac to encourage investments in the production of these critical components.

US Undersecretary of State for Economic Affairs Jacob Helberg said the project is designed to serve as a replicable framework that provides certainty and predictability for foreign investors at scale.

“If we get right in the Philippines, our hope is to replicate it in other places where it make sense to have industrial buildouts that help us secure key inputs that we need for our supply chains,” he said during the recent US-India Strategic Partnership Forum (USISPF) Leadership Summit

In addition, the US is also working with the Philippines to address regulatory hurdles, particularly through the $60-million grant from the Millennium Challenge Corp. (MCC) to support reforms in the energy sector.

MCC Acting Chief of Staff Dan Petrie said the “missing piece” in the US’ engagement with the Philippines on energy largely lies in the issue of red tape, which he blamed for delays in investments in the sector.

“These are the kinds of investments that the MCC makes that are going to be setting us up for success with our supply chains moving forward,” he said. — Dexter Barro II