Luzon’s trilateral prosperity corridor

The Luzon Economic Corridor, a strategic trilateral collaboration among the Philippines, Japan and the United States, promises to revolutionize infrastructure development in the northern and southern regions of the Philippines. This ambitious project, which has garnered the enthusiastic support of the Philippine Economic Zone Authority (PEZA), aims to alleviate logistical bottlenecks and bolster economic growth by enhancing connectivity and fostering investments in high-impact sectors.

The Luzon Economic Corridor is poised to be a game-changer for the Philippines, integrating various economic hubs such as Subic Bay, Clark, Manila and Batangas. The corridor is designed to enhance connectivity through significant infrastructure projects, including rail, port modernization, agribusiness, and the development of clean energy and semiconductor supply chains. This initiative is a direct outcome of the Philippines, Japan and US’ trilateral agreement, aiming to attract strategic investments and facilitate seamless interconnectivity among these key regions.

PEZA director general Tereso Panga has expressed full support for the Luzon Economic Corridor, emphasizing its potential to strengthen interconnectivity between Central Luzon and the CALABARZON region. According to Panga, the corridor encompasses a significant portion of PEZA-registered ecozones, with 137 operating in Metro Manila, Clark and Batangas.

These zones house approximately 1,600 manufacturing, service and export-oriented companies, contributing to over half of the Philippines’ total commodity exports in 2023.

The ecozones within the Luzon Economic Corridor have played a crucial role in job creation and economic development in provinces like Cavite, Tarlac, Batangas, Pampanga and Laguna. These areas have witnessed substantial growth due to the presence of economic zones, which have attracted a diverse array of businesses and industries.

Enhancing Ease of Doing Business

The infrastructure projects under the Luzon Economic Corridor are expected to improve the ease of doing business for companies within the zones. Panga highlighted the importance of redundant and complementary modes of transport to ensure a smooth flow of goods, which will enhance both local and global supply and value chains. This development is anticipated to resolve logistical challenges that have hindered the efficiency of locator companies and potential investors, making the Philippines a more attractive investment destination.

In line with the Luzon Economic Corridor, PEZA is exploring the establishment of new economic zones in the Bicol region. The current infrastructure projects by the Department of Public Works and Highways (DPWH), such as Toll Road 4 and Toll Road 5, along with the Asian Development Bank-funded PNR South-Long Haul Railway project, will significantly enhance Bicol’s accessibility to international trade. Additionally, the region’s existing airports will complement these upcoming infrastructure developments.

Addressing seaport needs

A critical component missing from the current infrastructure in the Eastern seaboard of the Philippines is international seaports. To address this, PEZA is considering the development of new seaports like Pantao, which would facilitate faster and more efficient transport of goods to various global destinations. This development would not only reduce trade risks but also create new growth areas, uplifting the lives of millions in the region and impacting the economy of South Eastern Visayas.

Looking ahead, PEZA is planning the development of the first mega economic zone in Palawan in collaboration with the Bureau of Corrections. This initiative aims to rejuvenate the Brunei Darussalam–Indonesia–Malaysia–Philippines East ASEAN Growth Area (BIMP-EAGA) partnership, focusing on the Greater Sulu-Sulawesi Corridor. Panga stressed the importance of seizing opportunities presented by the China+1 Strategy, the US CHIPS Act, and the US-Japan-Philippines trilateral agreement, all of which are integral to the success of the Luzon Economic Corridor.

The Luzon Economic Corridor represents a transformative initiative that holds the potential to reshape the economic landscape of the Philippines. With the backing of PEZA and the collaborative efforts of Japan and the United States, this project aims to decongest logistical bottlenecks, enhance connectivity, and attract strategic investments. By fostering the development of new economic zones and improving the ease of doing business, the Luzon Economic Corridor is set to drive significant economic growth and elevate the Philippines’ status as a prime investment destination.