From teaching Vietnam to trailing it, Manila races to turn raw resources into export power
For nearly three decades, a homegrown veteran of the Philippine Economic Zone Authority (PEZA) has watched the country’s industrial ambitions evolve — and watched a former student in the region race ahead.
The Philippines helped Vietnam learn from its experience in economic-zone development in the 1990s, when Manila was still seen as a regional model for attracting export-oriented manufacturing.
Today, Vietnam has overtaken the Philippines as a major manufacturing hub, producing goods for global markets while Filipino workers and managers are among those helping operate its factories.
The contrast underscores a longstanding problem in the Philippine economy: the country imports far more goods than it exports, leaving it heavily dependent on foreign products, capital and energy.
Tereso Panga, Director General of PEZA, who has spent nearly 29 years as agency insider, says the country now faces a "rare" to reverse that trajectory.
Factories are moving out of China as companies diversify their supply chains.
US investment in the region has surged, while Chinese companies are also looking for production bases in countries viewed as strategically "neutral".
The Philippines, he argues, cannot afford to miss the opening.
“We need to accelerate all our moves,” Panga told Breaking Ground, stressing the need to make the country more competitive before investors choose rival destinations.
"What is important is that we really need to take advantage of it...to make sure that we don’t pass up this opportunity," he added.
PEZA was created in 1995 (Republic Act No. 7916, "Special Economic Zone Act"), building on the country's earlier experience with export-processing zones dating to 1969.
Panga joined PEZA in 1998 as a planning officer and became part of the agency's early efforts to establish a nationwide economic-zone network.
It was also the era of President Fidel V. Ramos, whose administration aggressively promoted the Philippines to international investors.
The strategy was straightforward: create ready-to-use industrial locations where foreign companies could manufacture goods for export, while offering incentives and a more streamlined regulatory environment.
The Philippines was responding to a rapidly changing global economy, in which countries were entering free-trade agreements and competing to become manufacturing bases.
The "China Plus One" Strategy: Global companies are actively diversifying production bases outside of China to hedge geopolitical risks, positioning the Philippines as a primary alternative.
The US CHIPS Act: Strategic realignments in global semiconductor supply chains open doors for advanced electronic manufacturing investments.
Trilateral Alliances & Corridors: Frameworks like the US-Japan-Philippines trilateral agreement and the developing Luzon Economic Corridor (LEC) are creating highly integrated subic-to-Batangas logistics hubs.
By capitalising on these elements, PEZA aims to lock in an upward trajectory — targeting ₱300 billion in investment approvals for 2026 and returning to its economic "heyday" volumes.
Economic zones were designed to give investors infrastructure, fiscal incentives and easier access to government services.
But the Philippines eventually lost ground to countries such as Vietnam.
That reversal is particularly striking because the Philippines was once sufficiently advanced in economic-zone development to share its experience with Vietnam.
Today, Vietnam is a major manufacturing powerhouse for electronics, machinery, garments and consumer goods, while the Philippines remains much more dependent on imports.
The PEZA veteran describes the country's trade imbalance in simple terms: roughly four shipments enter the Philippines for every shipment that leaves as an export.
That imbalance matters because exports generate foreign-exchange earnings and support manufacturing, employment and investment.
A country that continually imports finished products without developing enough domestic manufacturing capacity loses opportunities to create value at home.
The problem becomes even more acute when the imports are essential commodities such as fuel and energy.
The Philippines' dependence on imported energy can put pressure on the peso and contribute to inflation when international commodity prices surge.
The long-term answer, the official argues, is greater domestic production — including renewable energy — combined with manufacturing that creates more value inside the country.
The Philippines provides one of the world's clearest examples of the value-addition problem.
The country is a major producer of nickel, a critical mineral for batteries and the energy transition. Yet much of its mineral output has historically been exported for processing elsewhere.
The result is a familiar pattern: the Philippines exports the raw material and other countries capture much of the higher-value processing.
Copper can leave the country as ore or concentrate and return as higher-value products such as cables and components. Agricultural commodities can be exported as raw materials and processed abroad before returning to the Philippine market.
PEZA's mandate is intended to address precisely that gap.
The agency says companies locating inside its economic zones must undertake genuine manufacturing and value-adding activities rather than simply extract and export raw materials.
The goal is to move progressively from extraction toward processing and finished products.
Indonesia's experience illustrates what a more aggressive value-addition strategy can accomplish.
The country restricted exports of certain unprocessed mineral ores in an effort to force more processing and investment to take place domestically.
That helped attract companies involved in mineral processing and battery-related industries.
