Weak and fragmented data systems are threatening to hold back the Philippines’ artificial intelligence (AI) ambitions, prompting the World Bank to call for greater investment in the infrastructure and governance needed to unlock the technology’s economic potential.

In its policy note “From Fragmentation to Flow: Reforms Promoting Trusted Data Sharing for Responsible AI in the Philippines,” dated June 1 and published last Friday, Aug. 21, the Washington-based multilateral lender said the country’s fragmented data ecosystem has become a structural weakness constraining digital transformation.

“Policymakers are racing to regulate AI outputs and outcomes but underinvesting in data availability, quality, and governance. Regulating AI without addressing data is like regulating vehicles without roads or fuel standards, as data ultimately shape AI performance, fairness, and accountability,” the World Bank said.

The report cited studies compiled by Paris-based Organization for Economic Cooperation and Development (OECD) estimating that increased sharing of public sector data could generate additional economic value equivalent to 0.1 to 1.5 percent of nominal gross domestic product (GDP), rising to one to 2.5 percent when private sector data are included.

The World Bank said the country’s data ecosystem suffers from “severe fragmentation” across infrastructure, policy frameworks, and institutional arrangements, with the Philippines lagging in broadband connectivity, data center capacity, and cloud adoption.

Investment in telecommunications infrastructure as a share of GDP declined to 0.39 percent in 2024 from 0.64 percent in 2018, while the country’s digital public infrastructure (DPI) remains at an early stage.

Cybersecurity also remains a weak spot, with the Philippines scoring 4.86 in cybersecurity and online safety under the World Bank’s Business Ready (B-READY) 2024 indicators—the lowest among the Association of Southeast Asian Nations (ASEAN) peers covered and well below the regional average of 12.76.

These weaknesses could prevent the Philippines from fully capturing the economic benefits of AI, including in agriculture, where applications such as precision farming, earlier pest detection, and more efficient water use could boost productivity by $2 billion, based on estimates cited in the policy note.

Agriculture employs nearly one-fourth of the Philippine labor force but produces less than one-third of the value added per worker generated by manufacturing or services, underscoring the potential gains from digitalization.

“Responsible AI adoption can support these objectives via enhanced data-driven decisions, precise targeting, and timely service delivery. However, without representative, integrated, and quality data—especially at local levels—AI may exacerbate existing inequity and leave vulnerable communities behind,” the World Bank said.

To address the gaps, the World Bank called for reforms covering data infrastructure, policies for trusted and secure data sharing, and institutional arrangements that clearly assign responsibility for data stewardship, financing, and implementation across government.

It recommended formulating a cohesive government data strategy that would identify investments needed in data, infrastructure, and people, integrate these investments into the national budget process, and provide financing incentives for government agencies and local government units (LGUs) to share and harmonize information.

The strategy could form part of the proposed data pillar of the AI governance framework being developed under the National Innovation Council (NIC), with the Department of Economy, Planning, and Development (DEPDev) among the lead agencies.

The World Bank noted that the E-Governance Act of 2025 and its implementing rules and regulations (IRR) have already addressed some data governance gaps by clarifying accountability, identifying government stewards of master datasets, and providing for secure application programming interface (API)-based access and interoperability.

However, the law still falls short of establishing a whole-of-government data governance framework, particularly in routine data sharing, data quality, financing, and implementation across national and local governments. The World Bank said stronger coordination and incentives would be needed, including through an e-government interoperability fund (EIF), which has yet to be created.

The report also called for new data collection to measure data assets and AI adoption, noting that Philippine digital economy statistics are constrained by limited firm-level data on information and communications technology (ICT) adoption and the absence of accounting for intangible capital such as data and AI systems.

The World Bank said the Philippines is at a crossroads in its digital and AI-enabled transformation, with the ability of public institutions to deliver services, firms to compete, and citizens to thrive increasingly dependent on unlocking the value of data. - Danielle T. Bayani