MOST local government units (LGUs) in the Philippines remain largely unprepared to adopt artificial intelligence, showing low to moderate readiness due to gaps in skills, infrastructure and funding, according to a new study by the Philippine Institute of Development Studies.
The discussion paper, based on an AI Readiness Index and interviews with LGU officials, found that shortages of information and communications technology and AI-related skills, weak last-mile internet connectivity and limited budgets for digital initiatives continue to hinder adoption.
Infrastructure, skills gaps
The study said LGUs also face difficulty balancing the delivery of essential public services and immediate political priorities with the longer-term process of implementing AI for local governance. While AI is expected to significantly boost national growth and productivity, the paper stressed that local governments need stronger policy support in infrastructure investment, skills development, governance reforms and resource allocation.
AI growth outlook
The authors noted that the Philippine AI sector is projected to grow from $772.1 million in 2024 to about $3.5 billion by 2030, with the Department of Trade and Industry estimating AI could contribute up to 12% of gross domestic product by 2030 if supported by robust digital infrastructure and regulatory frameworks.
The study warned that a new digital divide is emerging, as internet use remains concentrated in Luzon, with limited access across much of the Visayas and Mindanao, complicating AI adoption by LGUs and businesses.
Wide disparities
The AI Readiness Index showed LGUs have only partially established the foundational conditions for AI adoption across six pillars, with innovation scoring highest and governance, skills and digital infrastructure lagging. First-class LGUs posted the strongest readiness, while lower-income LGUs scored weakest due to structural constraints, though some outperformed wealthier counterparts through leadership and policy prioritization.
Regionally, the National Capital Region ranked highest, followed by Calabarzon, while the Bangsamoro Autonomous Region in Muslim Mindanao, Eastern Visayas, the Cordillera Administrative Region and Mimaropa ranked lowest, underscoring the need for coordinated, multilevel interventions. (From PhilExport)