State-run think tank Philippine Institute for Development Studies (PIDS) has called for a comprehensive strategy to accelerate artificial intelligence (AI) adoption among local businesses, warning that the country lags behind its regional peers despite widespread computer and internet access.

In its study titled “Readiness for AI Adoption of Philippine Business and Industry: The Government’s Role in Fostering Innovation- and AI-Driven Industrial Development,” PIDS found that only 14.9 percent of firms in the country currently use AI tools.

Adoption is concentrated in large companies located in urban centers, particularly those in the information and communications technology (ICT) and business process outsourcing (BPO) sectors.

Citing data from the Philippine Statistics Authority (PSA), the think tank noted that 90.8 percent of establishments nationwide have computers and 81 percent have internet access.

However, AI adoption remains limited, especially among micro, small, and medium enterprises (MSMEs). Overall, usage is estimated at just three percent across industries, with ICT and BPO firms at six to seven percent, and agriculture trailing at only 1.5 percent.

“The overall awareness of AI and other Fourth Industrial Revolution technologies remains notably low among Philippine firms, with only about one in five cognizant of these technologies,” the study said.

PIDS senior research fellow Francis Mark A. Quimba, former supervising research specialist Neil Irwin S. Moreno, and former research analyst Alliah Mae C. Salazar pointed to gaps in human capital as a key obstacle.

The Philippines continues to lag in ICT proficiency, engineering, and technology education, leaving its workforce underprepared for AI-intensive industries, they added.

These weaknesses, the study added, compound existing challenges such as limited broadband connectivity, insufficient data infrastructure, and weak regulatory mechanisms.

To address these barriers, PIDS urged the government to pursue a multi-faceted approach anchored on digital infrastructure, governance reforms, and human capital development.

This includes expanding broadband coverage nationwide, especially in underserved areas, and investing in data centers and cloud computing facilities to support growing AI requirements.

It also involves opening public datasets and adopting clear data-sharing policies, citing South Korea’s goal of releasing 45,000 datasets as a possible benchmark, PIDS added.

Another approach is establishing an independent data governance body to oversee privacy protection and cybersecurity, while ensuring regulations remain flexible enough to adapt to rapid technological change.

Also, PIDS urged promoting AI ethics and transparency by developing guidelines on responsible AI use, algorithmic accountability, and resource allocation.

On human capital, the think tank recommended expanding support for advanced AI education beyond the current target of 100 students, possibly by adopting models such as Australia’s next generation AI graduates program.

It also cited the United Nations Educational, Scientific and Cultural Organization (UNESCO) in calling for stronger collaboration between the Department of Education (DepEd), the Commission on Higher Education (CHEd), and industry players to align curricula with AI-driven job market needs.

“Taking inspiration from Japan’s AI Strategy 2022, the Philippines should establish clearer metrics for measuring AI talent development outcomes and create structured pathways for industry-academia collaboration,” the study said.

The authors also highlighted the need for continuous professional development and reskilling programs to help the existing workforce transition into AI-related roles.

PIDS pointed to global best practices as potential blueprints for Philippine AI governance.

These include Thailand’s sector-specific adoption targets, Germany’s establishment of an AI observatory to separate regulatory and implementation functions, and Vietnam’s comprehensive framework for responsible AI development under an independent ethics council.

The think tank also recommended fostering industry clusters and innovation hubs to encourage collaboration and knowledge sharing.

Larger corporations, it added, should be encouraged to mentor AI startups, while the government should support international partnerships to tap into global expertise and markets.

Ultimately, PIDS stressed that the country’s AI strategy must focus on enabling innovation while safeguarding public trust.

This means creating clear success metrics, ensuring transparency in resource allocation, and involving industry and civil society in independent evaluation frameworks.

In essence, PIDS advocates for a coordinated, multi-agency approach involving significant investment in digital infrastructure and education, coupled with robust governance frameworks, to foster responsible AI adoption and enhance the competitiveness of the Philippine business sector.

(Ricardo M. Austria)