Original Coverage & Source Attribution: www.manilatimes.net
THE Philippines’ push to expand artificial intelligence (AI) adoption is bringing data sovereignty and infrastructure choices into sharper focus as the government develops rules on where sensitive government data may be stored and processed.
Executive Order (EO) 119, signed by President Ferdinand Marcos Jr. in July 2026, establishes a risk-based data residency framework for government data. Its implementation could affect infrastructure decisions by agencies and private companies that handle government information, although the order does not apply generally to commercial or private-sector data, according to an industry study commissioned by Amazon Web Services (AWS).
The issue surfaced during a media briefing on Oct. 14, when The Manila Times asked AWS Philippines Country Manager Precious Lim whether growing concern about data sovereignty, particularly among government agencies and regulated industries, could drive renewed demand for on-premises infrastructure and how the company was positioning its hybrid offerings.
“We are aware of how the Executive Order 119 on data classification has been progressing,” Lim said, adding that AWS had been working with regulators and government agencies to share input and practices from other markets.
Lim said the company would continue investing in infrastructure based on customer requirements, including options for workloads that need to remain in the Philippines.
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“Whether you want to use the Manila Local Zone or if you want to use AWS Outposts or EKS anywhere, if you want to run it in your own data centers, we will always provide our customers options,” she said.
Lim’s response highlighted the role of infrastructure flexibility as organizations assess data residency requirements. The extent to which EO 119 will affect specific workloads, however, depends on the applicable data classification and the implementing rules and regulations.
AI DEPLOYMENT An AWS study finds that AI adoption among Philippine businesses is rising, but skills shortages and governance gaps continue to hinder wider deployment. THE MANILA TIMES FILE PHOTO
The scope of data residency
The report, Unlocking the Philippines’ AI Potential 2026, describes EO 119 as replacing a data classification policy dating to 1964 with a risk-based framework for government data.
Under the framework outlined in the study, the most sensitive categories of government data must remain within Philippine territory, while less sensitive data may be hosted on secure cloud platforms that meet recognized cybersecurity and encryption standards.
The order does not establish a blanket requirement for all Philippine data to remain in the country. Its stated scope is government data, rather than commercial or private-sector data in general. Private companies that process government information or provide services to government agencies may nevertheless need to consider how the implementing rules apply to their operations.
Lim said AWS was prepared to support customers that need to run workloads locally.
The study said the implementing rules would clarify how the framework will work in practice. It also raised a broader question for businesses: whether the government intends to retain the order’s current scope or use it as a model for future requirements covering commercial data.
AI adoption outpaces readiness
The policy discussion comes as Philippine businesses increase their use of AI but remain at an early stage in deploying the technology across their organizations.
AI adoption rose to 32 percent from 21 percent a year earlier, representing 52 percent year-on-year growth, according to the study by Strand Partners, commissioned by AWS and presented at the briefing. Among businesses using AI, 74 percent reported productivity gains and 68 percent reported increased revenue, with average revenue growth of 20 percent.
Despite those results, 57 percent of businesses remained in the exploration or experimentation stage, and only 17 percent had a formal roadmap for scaling AI across multiple functions.
Lim said businesses needed to connect AI initiatives to measurable operational needs rather than deploy the technology simply to demonstrate adoption.
“It is very important that you work backwards from what problem or challenge you are solving,” she said. “What is it that you want to address in terms of efficiency, or productivity, or are you trying to save on resources?”
She said businesses should focus on real operational challenges when assessing AI initiatives.
The study also found that only 19 percent of businesses considered themselves fully or very ready to adopt the next generation of AI. A shortage of digital skills was cited by 47 percent of businesses as a barrier, while 39 percent pointed to technical or data-related challenges.
Governance remains another constraint. Only 12 percent of businesses had deployed a formal, comprehensive and responsible AI framework, while 18 percent had a formal data governance framework.
Lim said data and infrastructure were fundamental to scaling AI. “Data is foundational if you want to make sure that your AI is able to really drive outcomes for your business,” she said during the presentation, explaining that AI agents cannot function well without proper data.
The findings indicate that wider deployment depends not only on access to computing infrastructure but also on the ability to manage data, establish safeguards and develop workforce skills.
Security, oversight and skills
The study identified data and infrastructure as prerequisites for the next phase of AI adoption. It also recommended that businesses measure AI initiatives against specific operational objectives, strengthen employees’ ability to work alongside AI systems, and define which decisions require human oversight.
Lim said AWS supports customers through security controls and safeguards for AI applications.
“Amazon Bedrock Guardrails is able to help customers apply policies and guardrails so that we safeguard AI applications,” she said, adding that security controls, monitoring and human oversight could help manage risks in deploying AI agents and other AI initiatives.
Government adoption could also influence private-sector confidence. Seventy-one percent of businesses said government leadership was crucial to accelerating AI adoption in the Philippines, while 74 percent said stronger collaboration between government and technology providers could speed deployment. Forty-five percent said government use of AI would encourage them to adopt and trust the technology more.
Lim said AWS had also been working to expand local skills development. She cited the company’s training and certification programs, saying, “Since 2017, we have already trained and certified 280,000 Filipinos.”
She also discussed AWS’ training agreement with the Technical Education and Skills Development Authority, which will make cloud and AI learning paths available through Tesda’s online learning channel.
As the government finalizes the implementing rules for EO 119, organizations will need to determine which data classification and regulatory requirements apply to their workloads before deciding whether to use public cloud, hybrid infrastructure or their own data centers.
The study’s findings suggest that infrastructure choices must be matched by stronger data governance and workforce readiness. The policy challenge is to clarify how data location and protection requirements apply while allowing organizations to select infrastructure suited to their legal obligations and operational needs.
