Philippine businesses are slow to adopt artificial intelligence (AI), despite having widespread access to computers and the internet, a new study from the Philippine Institute for Development Studies (PIDS) shows.
Only 14.9 percent of firms use AI tools, with adoption largely concentrated in big companies in urban centers, particularly the information and communications technology (ICT) and business process outsourcing (BPO) sectors, according to the study.
The study, titled “Readiness for AI Adoption of Philippine Business and Industry”, found a widening gap between basic digital penetration and the use of advanced technology. Data from the Philippine Statistics Authority (PSA) show that 90.8 percent of establishments have computers and 81 percent have internet access.
The authors of the study, PIDS senior research fellow Francis Mark Quimba, former supervising research specialist Neil Irwin Moreno and former research analyst Alliah Mae Salazar, identified structural barriers to AI uptake.
These include weak digital infrastructure, limited awareness of emerging technologies, significant skills gaps, and scarce funding opportunities.
“The overall awareness of AI and other Fourth Industrial Revolution technologies remains notably low among Philippine firms, with only about one in five firms being cognizant of these technologies,” the authors noted.
These challenges are compounded by a lack of human capital. The Philippines lags in ICT proficiency, engineering and technology education, which produces a workforce unprepared for AI-intensive industries.
Geography also plays a role, with Metro Manila and the CALABARZON region leading in AI adoption, while rural areas fall behind.
Overall, AI adoption is just 3 percent across industries. The ICT and BPO sectors have adoption rates of 6 percent to 7 percent, while agriculture trails at 1.5 percent.
Government agencies have started laying the groundwork for AI readiness. The Department of Trade and Industry’s (DTI) National AI Strategy Roadmap and the planned Center for AI Research (CAIR) aim to position the Philippines as a hub for AI research and innovation.
“The current policy environment in the Philippines strongly supports the promotion of AI use across various sectors,” the authors said.
They noted that many firms, especially micro, small and medium enterprises (MSMEs), remain in the early stages of digital transformation.
The Philippine Development Plan (2023-2028) also stresses the role of emerging technologies, including AI, in revitalizing industry, services and research.
The study proposes interventions in three domains: market facilitation, capability building and ecosystem coordination.
“There is a need for coordinated action across government agencies, substantial investment in digital infrastructure and education, and the establishment of clear governance frameworks,” the authors said.
These findings are timely as the nation observes the 23rd Development Policy Research Month (DPRM) this September with the theme “Reimagining Governance in the Age of AI,” according to PIDS.
