Despite a national push for artificial intelligence (AI) integration, local businesses, especially micro, small, and medium enterprises (MSMEs), struggle to adopt AI technologies due to infrastructure, awareness, and funding barriers.

According to a recent study by the Philippine Institute for Development Studies (PIDS), while the government has launched comprehensive strategies to promote AI adoption, including the 2021 National AI Strategy Roadmap and the 2024 establishment of the Center for AI Research, actual adoption rates remain low.

"AI-specific adoption in the Philippines is still in its early stages," the study stated, noting that only 14.9 percent of businesses used AI technologies as of 2021.

This lack of adoption is largely due to substantial barriers. The study noted limited digital infrastructure, particularly in rural areas, as a major challenge.

Many MSMEs also lack awareness of AI and its potential applications in their businesses. “Only one in five firms demonstrating familiarity [of AI technologies],” the study found, emphasizing the need for greater public awareness and education.

Another major barrier is the lack of funding opportunities. The study noted that the Philippines has a low score of 6.00 in Venture Capital Availability, making it difficult for businesses to secure the necessary capital for AI investments.

"These barriers are further compounded by regional disparities in digital infrastructure and business activity," the study warned, "creating a cycle where less developed regions fall further behind in technological adoption."

The study suggested that the government needs to take a more active role in addressing these barriers. It recommended expanding broadband connectivity, particularly in underserved areas, and investing in data centers and cloud computing facilities.

To address the lack of awareness, the study proposed greater collaboration between the government, industry, and educational institutions to ensure that programs are aligned with the AI-driven job market.

The study also suggested that the government should establish clear guidelines on AI ethics, data privacy, and algorithmic transparency to foster public trust and support innovation.

"Rather than direct government provision of AI services," the study recommended, "focus should be on creating frameworks that enable private sector innovation while ensuring public benefit."

The study concluded that while the Philippines has made efforts to promote AI integration, adoption rates vary widely across industries, regions, and firm sizes.

It emphasized the need for strategic government initiatives to close these gaps and foster a more inclusive and competitive AI environment for businesses nationwide.