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Philippines: Powered by AI -The Philippines' National AI Strategy Roadmap 2.0

The Philippines is preparing for a quantum leap in artificial intelligence (AI) adoption with the launch of the National AI Strategy Roadmap 2.0 (NAISR 2.0). Announced publicly on July 3, 2024, by the Department of Trade and Industry (DTI), and supported by the Asian Development Bank and a legislation mandate from the Tatak Pinoy Act (Republic Act No. 11981), this updated roadmap aims to position the country as a regional AI powerhouse fostering innovation and sustainable economic growth. For businesses and stakeholders keen on staying ahead of the curve, understanding the nuances between the 2021 NAISR (NAISR 1.0) and NAISR 2.0 is key to understanding the upcoming legislative and regulatory landscape in the Philippines.

In this Insight article, Edsel F. Tupaz and Danica Anne S. Escobiñas, from Gorriceta Africa Cauton & Saaavedra, take a deep dive into the NAISR 2.0, its interplay with other privacy laws, and the impact it may have on development in the Philippines.

akinbostanci/E+ via Getty Images

In 2021, NAISR 1.0 laid the groundwork for AI integration in the Philippines, focusing on establishing an AI ecosystem, maintaining competitiveness, and preparing the workforce for upskilling and reskilling. However, the rapid evolution of AI technologies and emerging challenges necessitated an updated approach. NAISR 2.0 addresses these gaps by incorporating advanced technologies like generative AI and placing a stronger emphasis on ethics, governance, and regulatory frameworks.

While the DTI is targeting to finalize the NAISR 2.0 by the end of 2024, the DTI has discussed the salient changes and enhancements in NAISR 2.0 through official speaking engagements, panels, and information decks. This article is based on these materials which the authors had accessed.

NAISR 2.0 includes strategies to harness generative AI, thus opening new opportunities for businesses across various sectors such as healthcare, agriculture, creative, and software development industries, along with other higher value-added services. This move encourages enterprises to integrate AI solutions to streamline operations and develop new business models. As AI demands increase, businesses can expect to invest more in technological infrastructure upgrades, signaling a need to upgrade their current systems to accommodate advanced AI technologies.

Further, the new roadmap addresses emerging themes such as ethics and governance. While it is important to harness the capabilities of AI, it is equally important to limit or restrict AI use which deploys manipulative techniques that impair informed decision-making, exploits vulnerabilities, or produces other harmful biases.

Considering that the Data Privacy Act of 2012 had been influenced by antecedents and developments that led to the General Data Protection Regulation (GDPR), it is plausible, if not expected, that the Philippines will align any upcoming AI legislation and AI regulation with the EU's AI Act and with supervisory authorities acting under the AI Act. In view of this and the NAISR 2.0, entities may consider aligning their AI practices with new ethical standards and the AI ecosystem 'conscience' that prioritizes responsible AI use. Preparation and readiness can include complying with existing data governance policies to ensure privacy and security, as well as anticipating compliance with forthcoming regulations across multiple jurisdictions, to minimize legal uncertainty.

In fact, Philippine regulators such as the National Privacy Commission (NPC) are actively developing policies and engaging in cross-border dialogue to establish guidelines for the ethical use of AI. Currently, the NPC is developing a Data Privacy in AI document, including a Risk Assessment Guide for Personal Information Controllers. 

Further, NAISR 2.0 acknowledges issues like limited AI use cases, resource constraints, and data strategy development difficulties. To address these barriers, it proposes the establishment of support mechanisms to help enterprises overcome adoption barriers, including access to resources and expertise. Under NAISR 2.0, the DTI has established the Center for AI Research (CAIR), which will serve as a hub for AI research and development (R&D). CAIR is collaborating with industry leaders like Amazon Web Services and AI Singapore. Businesses can engage CAIR for research partnerships to enhance their AI capabilities. Moreover, key institutions like the Department of Science and Technology (DOST), the National Economic and Development Authority (NEDA), and the University of the Philippines are expected to support R&D projects.

The updated AI roadmap aims to increase the R&D budget from 0.3% to 1% of the GDP to align with UNESCO recommendations. This budget expansion can open up funding opportunities for AI-related projects and collaborations, thus encouraging more innovation within the industry. For businesses, this means there will be more resources available to support the development and implementation of AI technologies, potentially accelerating their adoption and integration into various sectors.

Aligning with current labor policies is also a priority under NAISR 2.0. The roadmap aims to synchronize with initiatives like the Trabaho Para Sa Bayan Act and the Philippine Labor and Employment Plan 2023-2028. This alignment is significant as it reflects the Philippines' approach to the perceived and actual threat of AI to Filipino labor. Being generally protective of labor, it has been reported that there has been some resistance from the legislative branch in adopting AI-friendly regulations. However, the Department of Labor and Employment has recognized that there is a need for strategies to mitigate potential job displacement caused by AI by focusing on upskilling and reskilling the workforce. The success of the Philippines in the business process outsourcing (BPO) and information technology (IT) industries can be further amplified by AI adoption, enhancing the country's competitive edge in these sectors.

In relation to upskilling, the roadmap promotes collaborative efforts between the Government-Industry-Academia (Triple Helix Collaboration) to address skill gaps and improve competitiveness. This includes overhauling educational curricula to include AI and data science and implementing training programs to adapt to AI-driven job roles. Enterprises are urged to invest in employee development as AI is expected to create positions requiring advanced technical skills. Investing in talent and training will be critical for businesses to adapt to new AI-driven roles and maintain a competitive workforce.

These salient changes present attractive opportunities for businesses, particularly regarding economic growth potential and industry-specific applications. The DTI expects widespread AI adoption could add up to PHP 2.6 trillion (approx. $44.5 billion) annually to the country's GDP. This would have a significant economic impact - it will make it attractive for existing businesses and investors to invest in AI technologies to capitalize on potential market growth. The Tatak Pinoy Act, which can be supportive of NAISR 2.0, provides incentives for offering Philippine products and services that enhance the global competitiveness of domestic enterprises. These incentives include faster VAT refunds, access to 'green lanes' for expedited processing, and domestic preference in government procurement, among others.

With NAISR 2.0's emphasis on ethics and governance, businesses must prepare for new legislation or regulations that will shape AI deployment. The roadmap is expected to lead to detailed regulatory frameworks, so, monitoring these developments will be essential for compliance. Companies operating internationally should consider how Philippine AI regulations may align with global standards like the EU's AI Act.

NAISR 2.0 represents a significant stride towards embracing AI in the Philippines, taking a comprehensive approach that aims to address previous limitations under version 1.0. Hopefully, NAISR 2.0 will serve as a basis for the adoption of future technology that will surely be even more impactful than any AI technology available today.

For businesses and stakeholders, the new AI roadmap signals legislative change and opportunities for growth. By acting now and investing in infrastructure, talent, and ethical practices, businesses can ensure compliance with future regulations and position themselves at the forefront of an AI-driven economic transformation.

Edsel F. Tupaz Senior Partner
[email protected]
Danica Anne S. Escobiñas Associate
[email protected]
Gorriceta Africa Cauton & Saaavedra, Philippines