PH missing out on AI boom–Capital Economics

MANILA, Philippines — The Philippines is neither benefiting significantly from the global artificial intelligence (AI) boom nor well positioned to capture the productivity gains that wider adoption could bring, leaving the country at risk of falling behind in the AI revolution, London-based research firm Capital Economics said.

Gareth Leather, a senior Asia economist at Capital Economics, pointed to the country’s export performance as evidence that it is missing out on the AI-driven surge.

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Philippine electronics exports have grown at a much slower pace than those of other major semiconductor exporters in the region, including Taiwan, South Korea, Singapore and Malaysia, he said.

“Electronics exports have surged across much of Asia over the past year as firms have ramped up production and raised prices of semiconductors and other components used in AI infrastructure,” Leather said. “By contrast, the Philippines’ electronics exports are rising at a much weaker pace.”

The Philippines also appears to be lagging in the adoption of AI in the workplace, Leather said, citing its latest AI Economic Impact Index, which measures economies’ ability to innovate, adopt and benefit from the technology.

The country ranked 43rd out of 47 economies tracked by the index, placing it near the bottom of the group and behind all other Asian economies covered by the study.

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At the same time, being “on the wrong side” of the AI boom could be particularly costly for the Philippines because its business process outsourcing industry, a major source of foreign exchange, is among the sectors most exposed to disruption from AI, Leather warned.

Many of the services provided by the industry—including customer support, back-office administration, finance and accounting, routine IT support and other repetitive cognitive tasks—are precisely the kinds of work that advances in AI are making easier to automate, he noted.

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Already, the Information Technology and Business Process Association of the Philippines, the umbrella organization of business process outsourcing, now expects industry revenues to reach between $43.3 billion and $50.5 billion by 2028. These projections mark a sharp downgrade from the $59-billion target set when the industry association launched its six-year roadmap in 2022.

“While AI will not eliminate these jobs overnight, even a gradual reduction in demand for call-center workers would have a major economic impact,” Leather said. INQ