Editor’s Note: This is Part 2 of a 3-Part PortCalls series on on the Pax Silica Initiative and Luzon Economic Corridor. For Part 1 on Why Cargo Can’t Move Until the Rules Do, read here.
Infrastructure announcements move faster than the administrative machinery that has to govern them. Four regulatory gaps stand out.
- A transshipment order for the multimodal Subic-Clark-Manila-Batangas (SCMB) corridor. Under the Customs Modernization and Tariff Act (CMTA, Republic Act 10863), transshipment — moving cargo under customs control from an importing to an exporting conveyance — is legally confined within a single customs collection district. Clark, Subic, Manila, and Batangas fall under separate districts, so a railway designed to move containers seamlessly between them will, without a new legal instrument, run into that boundary. Former Bureau of Customs-Port of Clark district collector Atty. Erastus Sandino Austria has recommended the customs commissioner use CMTA Section 206’s power to revisit BOC’s administrative subdivisions — not by merging districts, but by issuing a Customs Administrative Order (CAO) creating a formal transshipment corridor across Clark, Subic, and Bataan. Separately, the Subic-Clark Alliance for Development Council (SCADC) has endorsed a draft executive order that would declare the three freeport zones transshipment hubs with simplified procedures and an automated, unified customs process for sea-air-sea transshipment. As of this writing, neither instrument has been issued. Without one, cargo arriving by rail at Clark from Subic would in theory need full re-entry formalities rather than moving as in-transit — defeating much of the railway’s purpose.
- Rail-freight-specific transport and safety regulations. The Philippines has no modern regulatory framework for commercial freight rail at this scale — the closest precedent, the Philippine National Railways system, is passenger-oriented. The Department of Transportation (DOTr) will need technical and safety standards for freight rolling stock and intermodal terminals, an operating structure (concession, public-private partnership [PPP], or state-run) for the SCMB line, and liability, cargo-insurance, and claims rules for shipments that change conveyance mid-journey. Existing port and airport regulations were not written with a rail leg in mind.
- Freeport-to-freeport and freeport-to-ecozone interconnection rules. Clark Freeport Zone, Subic Bay Freeport Zone, the Freeport Area of Bataan, and PEZA ecozones in Batangas and Metro Manila operate under separate charters, authorities, and, in places, separate fiscal-incentive regimes. Moving goods between them — especially goods not yet formally imported into the customs territory — currently requires ad hoc coordination rather than a standing legal bridge. An operationalized Luzon Economic Corridor needs either harmonized inter-zone transfer rules or an overarching framework, along the lines SCADC’s proposed executive order gestures toward, that lets a container move from Subic’s port through Clark’s air cargo terminal to a Batangas factory without being treated as three separate import-export events.
- A Pax Silica-specific import and bonded-manufacturing regime. The zone’s core activity — semiconductor and AI-hardware manufacturing and data-center operation — involves capital equipment, precursor chemicals, and components that are high-value, time-sensitive, and, for advanced chips, subject to export-control sensitivities on the supplier side (notably U.S. re-export rules). BOC and the Department of Trade and Industry will likely need to confirm whether existing bonded-manufacturing-warehouse and temporary-importation rules can simply be extended to the zone, or whether a purpose-built regime is required, and coordinate with U.S. counterparts on any dual-use items moving through it. This is a determination customs counsel should weigh in on directly rather than one this report can resolve.
Suggestions to Operationalize the Two Projects
On the customs side:
- Fast-track the CAO recommended by BOC-Clark to formally establish the Subic-Clark-Bataan transshipment corridor, using the CMTA Section 206 authority the commissioner already has, rather than waiting for the railway to be operational before writing the rule.
- Pursue the SCADC-endorsed executive order declaring Subic, Clark, and Bataan freeport zones as transshipment hubs, paired with an automated, unified customs procedure for sea-air-sea and eventually rail-based transshipment.
- Extend the same transshipment-corridor logic to Batangas as the SCMB Railway’s southern terminus, so the framework is corridor-wide rather than limited to the northern leg.
- Accelerate BOC’s trade-facilitation and single-window digitization efforts so inter-zone and inter-district cargo movement can be tracked electronically in real time — a prerequisite for any transshipment corridor to work without manual clearance at every hand-off.
- Confirm — and if needed, build — a bonded-manufacturing and temporary-importation framework tailored to Pax Silica’s semiconductor and data-center equipment, in coordination with DTI and the Philippine Economic Zone, ahead of the zone’s first locator applications rather than after.
On the transport side:
- DOTr and the Office for Transportation Security should issue freight-rail operating, safety, and intermodal-terminal standards well before the SCMB’s targeted construction start, so bidders and financiers have regulatory certainty going into the Investment Forum and subsequent tenders.
- Clarify the SCMB Railway’s operating model early, since financing structures — and the government guarantees investors will expect — depend heavily on this choice.
- Align the second Clark runway’s 2029 completion timeline with air-cargo capacity planning for both the Pax Silica zone and express carriers expanding at Clark, so airside capacity does not lag landside industrial demand.
- Establish a joint DOTr-BOC-freeport authority working group — building on the existing BOC-SCADC technical working group — with a standing mandate to resolve multimodal regulatory conflicts as they arise.
Watch out for Part 3 – Pax Silica and the Luzon Economic Corridor: Potential Pitfalls; What Logistics Stakeholders Stand to Gain
