The Philippines’ proposal to lease one island for a century is, at its core, a proposal to test whether institutional credibility can attract long-term capital. With the peso recently hitting a record low of ₱64.17 to the US dollar, the question is not simply how to offer investors more incentives. It’s whether a distinct legal and administrative system could make investment rules more predictable.
The idea came from an unusual source: my father, during a visit to the Philippines. Under his proposal, a foreign government would help build the island’s institutions while the Philippines retained sovereignty, national defense, and responsibility for essential public services. After 100 years, the country would take back a mature economic center and could draw lessons from its institutions.
A test of institutions, not incentives
The concept has a Philippine precedent, though a different one. In January 2016, then presidential candidate Rodrigo Duterte proposed leasing islands to multinational companies, which would set infrastructure and operating rules. This proposal instead calls for a government-to-government partnership.
Its historical reference is Hong Kong. China leased the New Territories to Britain for 99 years in 1898. Hong Kong later became a channel for international capital, expertise, and trade into Shenzhen and the wider Pearl River Delta. That history suggests how a jurisdiction with distinct institutions might influence growth beyond its own boundaries, though it doesn’t guarantee the same result in the Philippines.
The country already has investment incentives and special economic zones. The proposed experiment would go further: one island could have separate civil and commercial laws, an independent judiciary, its own tax system, and distinct regulatory institutions. Investors would be offered predictable rules and enforceable contracts, with separate residency arrangements while Philippine citizenship remained intact.
The foreign partner wouldn’t run the island’s public services. The Philippines would remain responsible for healthcare, education, policing, municipal services, and defense. The partner’s contribution would be institutional expertise, including judicial support, regulatory standards, and independent oversight. That would require constitutional changes, particularly for an independent judiciary and a distinct immigration system.
Why Singapore or South Korea?
Singapore could be a candidate because its companies face constraints at home: a small domestic market, limited land, and a limited workforce. The Johor-Singapore Special Economic Zone already reflects a regional strategy that pairs Singapore’s financial and technological capabilities with neighboring land and labor.
A Philippine island could offer another version of that model. Singaporean firms might place manufacturing, logistics, and research campuses there, while keeping headquarters and advanced research in Singapore. The distinction from a conventional industrial park would be a separate judicial and regulatory framework supported by Singaporean institutions.
Private investors could fund much of the infrastructure, limiting direct exposure for Singaporean taxpayers. Singapore would contribute institutional expertise without taking on territorial administration. There’s no indication Singapore has expressed interest, and whether the arrangement would work would need careful study.
South Korea is another possible partner, given its strengths in advanced manufacturing, engineering, and digital governance. The proposal doesn’t depend on either country specifically: a partner would need proven administrative capacity, strong institutions, and no territorial ambitions.
Regional gains and sovereignty safeguards
A successful commercial center could extend its impact beyond the island. Modern ports, industrial parks, and universities might create demand for agriculture, labor, and materials from nearby provinces, spreading investment across the region. Choosing a site would require an independent feasibility study and a credible process to secure informed consent from affected communities.
The arrangement would also need to define limits and protections clearly. Foreign military bases and territorial claims would be barred; the Philippines would retain national defense and natural resource rights. Existing residents’ citizenship, property rights, and political representation would need protection.
The foreign partner would also need assurance that a future Philippine administration couldn’t end the agreement unilaterally. A constitutionally authorized bilateral treaty, international arbitration, compensation provisions, and political-risk insurance could reduce that uncertainty, though none could remove it entirely.
The lasting test
The strongest case for the proposal may be its potential effect on expectations at home. If residents and businesses see permits handled predictably, disputes resolved efficiently, and rules applied transparently, they may demand the same standards elsewhere in the country. The island’s long-term value could lie as much in that demonstration as in its infrastructure.
The Philippines has used incentives and economic zones for decades. A one-island experiment would ask a different question: can credible institutions draw capital and build practices that the country can adapt more widely? In 1977, Singapore’s then Prime Minister Lee Kuan Yew described the need to find an institutional approach suited to the country: “We have got to find our own style. We have got to be bold enough to experiment.”
– Rappler.com
Dr. Jaemin Park is an adjunct professor at the University of the Philippines College of Public Health and works across Southeast Asia on healthcare financing, medical innovation, and public sector reform.
