Philippine businesses slow to adopt AI, study finds

Despite widespread Internet access, Philippine businesses are lagging in adopting artificial intelligence (AI), with just 14.9% using the technology, according to new research from the Philippine Institute for Development Studies (PIDS).

The study “AI Adoption of Philippine Business and Industry: The Government’s Role in Fostering Innovation — and AI-Driven Industrial Development” found that AI adoption is concentrated in large companies in the nation’s urban centres. The sectors with the highest adoption rates were information and communication (7.19%) and business process outsourcing (BPO) (5.94%).

This slow progress starkly contrasts with data from the Philippine Statistics Authority (PSA) indicating that over 90% of businesses in the country own computers and 81% have internet access.

The PIDS study identified multiple key barriers to adoption, including limited digital infrastructure, low awareness of AI technologies, skill gaps, and a lack of funding. It also notes that overall AI awareness and other ‘Fourth Industrial Revolution’ technologies remain notably low among Philippine firms, with only about one in five firms being familiar with them. 

The report also highlighted significant regional disparities in digital infrastructure and business activity, with less-developed areas falling further behind in technological adoption.

While the government has introduced initiatives like the Department of Trade and Industry’s National AI Strategy Roadmap and the Centre for AI Research to encourage AI adoption, significant barriers persist, particularly for micro, small, and medium enterprises (MSMEs).

The study urges the government to prioritize infrastructure development, specifically the expansion of broadband connectivity, especially in underserved areas, and to increase investments in data centres and cloud computing facilities to support the country’s growing data needs.

Additionally, the study emphasised the importance of setting clear metrics for AI talent development, offering upskilling programmes, promoting public-private partnerships, and crafting regulatory frameworks for responsible AI use. It also recommends implementing these roles through coordinated action across government agencies.