Why is there so much fuss about Pax Silica when it is supposed to result in employment, higher incomes and economic growth?
Pax Silica is an alliance of countries working together to secure everything needed to produce Artificial Intelligence (AI) and other modern technologies.
In the Philippines, the facility will be located on around 1,600 hectares of government property now under the management of the government agency known as the Bases Conversion and Development Authority (BCDA) in New Clark City, Tarlac.
It is projected to be the location of large data centers, which will have servers running programs using AI. It will have companies producing semi-conductors needed for large scale computing for the AI parts of the facility.
It will have plants that will process rare-earth minerals such as nickel. These facilities will consume so much power and water that they will require investments in addition to the existing power and water facilities currently available in the area.
Nuclear power, solar power and natural gas are among the sources of this energy and are expected to be essential components of this project.
The firms that will locate in the area will benefit from tax incentives offered by BCDA such as income tax holiday from 4 to 7 percent, value-added tax relief, and a special corporate income tax which is a 5% tax rate after the income tax holiday. These incentives will certainly improve the financial viability of the firm locators.
The government of the United States is acknowledged as the main endorser and organizer of Pax Silica. (This begs the question: Why would the US government want to locate this convergence of firms here when they have plenty of land in the US?)
At this time, just a few weeks after this idea was announced, many groups have been vocal in opposing it, with some even staging rallies. There are strong reasons.
Studies throughout the world, especially in the United States, reveal that these AI hubs consume a lot of power because running the computers generates heat and requires energy-intensive cooling systems, which also need a lot of water. Many fear that the large increase in the demand for water will reduce the supply of water to households in Central Luzon.
Noise pollution is also a common complaint because of the noise produced by the machines running the cooling systems that continuously disturb adjoining human settlements..
Water demand is also an essential aspect because the cooling systems need water to operate properly.
Artificial Intelligence displaces employees; therefore, the employment-generating effect of the facility's long-run operation is in question.
However, since President Ferdinand Marcos Jr. has announced this project as a game-changer, it can be considered a done deal. All the kinks described above will be addressed. The Pax Silica project in Tarlac will be implemented, and a progress report will expectedly be made in next year’s State of the Nation Address.
But the details still have to be worked out. The Eastern Visayas region must position itself so it benefits from the economic impact of Pax Silica.
How can we be affected if the region is more than a thousand kilometers away from Tarlac?
I can think of two aspects: energy and labor.
. When it comes to power, the cost of electricity could potentially increase because of the one-grid policy whereby the facility will compete for power with the electric cooperatives, including ours. A similar situation occurred in the United States; that is why there are groups there who oppose the data centers. They believe that the increase in gasoline and electricity prices are caused by the operation of these data centers in their areas. .
On the labor side, we can help produce engineers and IT specialists who can be employed in the Pax Silica firms. The projected demand for high value jobs is 190 thousand.
The concept of an integrated Pax Silica facility in the Philippines is new. But many sectors already oppose it. There are advantages and disadvantages.
On the bright side, after due consultation, we can share in the benefits, which will then result in economic growth. The negative side appears to result from inadequate information from the BCDA, which may not be willing to tell all it knows and plans to do at this stage..
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