Can the Philippines keep up with AI transformation?

With AI adoption rising fast, the Philippines is scrambling to close widening gaps in digital infrastructure, talent, and investment.

While 86% of Filipino knowledge workers already use AI tools at work – among the highest globally – the country ranks just 67th in the Global AI Index. Worse, the country received a score of zero in AI research and development output in 2024 in the Tortoise Media Index​.

Moreover, the country’s AI ambitions hinge on reliable digital infrastructure – and here, the picture is mixed. As of January 2025, internet penetration stood at 83.8%, or roughly 97.5 million users, an increase of 792,000 users from the year prior​.

Mobile broadband dominates the access landscape, with 142 million cellular connections, 98.2% of which support 3G, 4G, or 5G data​. However, internet quality remains uneven.

Median mobile download speeds climbed to 58.83 Mbps in February 2025 (65th globally), while fixed broadband hovered around 94 Mbps (58th globally)​.

Further complicating matters is affordability. Over 58 million Filipinos (52% of the population) are considered “internet poor,” according to the World Bank. This hampers equitable access to AI-driven services​.

Efforts to address these deficits are underway. The National Fiber Backbone launched Phase 1 in April 2024, spanning 1,245 kilometres across Luzon, with a full six-phase completion target set for 2026​.

The Philippine Digital Infrastructure Project (PDIP), backed by a $287 million World Bank loan, aims to expand rural connectivity and establish 772 free Wi-Fi sites across Mindanao​.

Despite gains, these infrastructure projects are still mid-flight. Advanced AI applications require low-latency, high-bandwidth connectivity, which remains unevenly distributed nationwide.

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A workforce willing, but not yet ready?

Filipinos are embracing AI faster than their employers are prepared for it. The number of Filipino knowledge workers already using AI exceeds the global average of 75%. Of this, at least 83% bring their own AI tools into the workplace – raising concerns about data security and compliance risks​.

Yet at the organisational level, preparedness is lacking. Only 22% of Philippine companies feel fully ready to deploy AI, according to Cisco’s 2024 AI Readiness Index​.

Leaders echo this concern – 54% of CEOs said their companies had not integrated AI tools into business operations, and a Deloitte study flagged talent scarcity as the biggest barrier to AI adoption​.

In response, the government has rolled out a multi-agency approach, investing in AI-powered education tools, training standards, and market analytics for the labour sector.

There have also been partnerships with global tech leaders, such as Google and Coursera, aiming to build foundational digital skills for workers, SMEs, and returning overseas workers.

However, the sheer scale of reskilling needed remains daunting. With a growing number of jobs highly exposed to AI disruption, the challenge lies in rapidly scaling and sustaining these efforts​.

Strategy in place, execution in progress

The National AI Strategy Roadmap 2.0 (NAISR 2.0), unveiled in July 2024, outlines the government’s bold ambition to transform the Philippines into an ASEAN AI hub. It envisions a $44.5 billion annual boost to GDP through AI adoption​.

The roadmap is built on seven imperatives – from infrastructure and talent to ethical governance and research – and calls for tripling national R&D spending to 1% of GDP, from the current 0.3%.

Ethics is also getting a front-row seat. The EUREKA AI governance framework, developed by the Department of Information and Communications Technology (DICT), emphasises fairness, transparency, and alignment with global standards.

Still, gaps between policy and execution remain. NAISR 2.0 lacks clear timelines, performance indicators, or detailed funding plans.

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Private sector moves, investment lags

Private sector interest in AI is strong, but funding and foreign investment tell a more cautious story.

According to Cisco, 65% of companies in the Philippines are allocating 10% to 30% of their IT budgets to AI initiatives​.

The BPO sector is especially active – 67% of BPO firms are using AI, mostly for chatbots, process automation, and analytics.

Notably, despite automation fears, the BPO industry added 135,000 jobs in 2024, showing AI’s potential to augment rather than replace jobs – if upskilling keeps pace. Cloud and data infrastructure is also booming. At least 85% of enterprises aim for full cloud migration by 2025, and data centre capacity is set to grow five-fold to 300MW, driven by firms like Huawei, AWS, and ePLDT.

However, foreign direct investment is underwhelming. In 2024, net FDI reached only $8.93 billion, just 0.1% higher than 2023, and short of the $9 billion target. Investment pledges dropped by 39% year-on-year​. December 2024 recorded the lowest monthly FDI inflow in 11 years.​

Investor hesitancy has been linked to global uncertainty, changing local incentive policies, and persistent competitiveness issues such as high operating costs and regulatory red tape. These structural barriers risk delaying large-scale AI investments and R&D initiatives, which are vital to the strategy’s success.

Will the momentum outrun the gaps?

The Philippines has shown clear ambition, fast-moving digital enthusiasm from its workforce, and coordinated national policies for AI transformation. But the gap between intent and capability remains wide.

Infrastructure is still catching up. Skills training, while expanding, may not scale quickly enough. And R&D capacity is far from world-class.

If the country wants to shift from AI consumer to AI contributor – and emerge as a true innovation hub in ASEAN – it must move beyond strategy to sustained execution, backed by hard investments, faster implementation, and deeper regional equity in infrastructure and opportunity.

The question is not whether the Philippines is moving on AI – but whether it’s moving fast enough.