Photo by: ( Geoffrey Moffett ) on Unsplash
MANILA, PHILIPPINES [TAC] – Despite near-universal access to computers and the internet, Philippine businesses remain slow in adopting artificial intelligence (AI).
A recently released study by the Philippine Institute for Development Studies (PIDS) found that less than 15 percent of firms use AI tools with adoption concentrated in large companies located in urban centers, particularly in the ICT and BPO sectors, highlighting a widening gap between basic digital penetration and advanced technology use.
The authors identified structural barriers hampering AI uptake, including 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,” they noted.
In terms of gaps in human capital, the Philippines lags in ICT proficiency, engineering, and technology education—producing a workforce unprepared for AI-intensive industries. Geography also widens the divide: while Metro Manila and CALABARZON lead in AI adoption, rural areas are left further behind.
Even basic connectivity is uneven. Although most businesses are equipped with computers, not all are fully online. Data from the Philippine Statistics Authority (PSA) show that 90.8% of establishments in the country own computers and 81% have internet access, yet AI use across industries remains limited—especially among micro, small, and medium enterprises (MSMEs).
Overall, AI adoption is just 3% across industries, with ICT and BPO sectors at 6 to 7% and agriculture trailing at 1.5%.
Government response
Government agencies have begun laying the groundwork for AI readiness. The Department of Trade and Industry’s 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 observed.
However, they noted that many firms, especially 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.
Translating policies into actual business-level adoption, however, remains a challenge. The authors stressed that the country must play an enabling role in ensuring AI adoption benefits industries and citizens alike.
“AI has the potential to drive significant economic growth by enhancing productivity, reducing operational costs, and enabling the development of new products and services,” they emphasized.
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 explained.
