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| View of Singapore skyline from Collyer Quay. |
To take the Singapore economy forward, the Budget for FY2025 (1 April 2025 to 31 March 2026) emphasises three key areas: technology and innovation, the enterprise ecosystem, as well as infrastructure investments.
"Our efforts to enhance our technology and innovation engines, strengthen our enterprise ecosystem, invest in new infrastructure and overcome our resource constraints, will enable us to refresh our value proposition and stay ahead in a rapidly changing world," said Singapore PM and Minister for Finance, Lawrence Wong, in a speech outlining Singapore’s FY2025 Budget.
New ideas, innovation and technological progress will be the country's growth drivers, PM Wong said. "To enhance our technology and innovation engines, we have to anchor more high-quality investments," he said in his Budget speech.
While PM Wong acknowledged that Singapore is unlikely to outbid major economies in attracting investments, he noted that "we do need to set aside sufficient resources to maximise our competitive strengths". The National Productivity Fund will be topped up by S$3 billion as a result.
"Our R&D efforts are critical in powering our innovation and technology engines," Wong explained.
A new national semiconductor R&D fabrication facility providing industry-grade tools for researchers and industry partners to prototype and test new semiconductor innovations will contribute to this end, an investment of about S$1 billion.
"We will also support companies that undertake R&D and innovation in partnership with other stakeholders. We have a good suite of schemes today, which we will further enhance," PM Wong said.
When it comes to a stronger enterprise ecosystem, the government will provide more support for enterprises to scale up, execute their growth plans, and compete globally, Wong said. "In particular, I will extend our support schemes for internationalisation, and for mergers and acquisitions," he said.
There will also be a Global Founder Programme by EDB later this year to encourage global founders to anchor and grow more new ventures in Singapore.
PM Wong called on enterprises to invest in technology to enhance their competitiveness and productivity. "Enterprises can adopt off-the-shelf solutions like AI-powered analytics and digital marketing tools. We will continue to encourage the adoption of such solutions through initiatives like the Productivity Solutions Grant and the SMEs Go Digital," he shared.
"Beyond a certain stage, enterprises will need AI solutions, which are tailored to their needs and integrated into their business processes and systems. To support this, I will set aside up to S$150 million for a new Enterprise Compute Initiative. Under this initiative, eligible enterprises will be partnered with major cloud service providers to access AI tools and computing power, as well as expert consultancy services. This will help enterprises leverage AI more effectively in their transformation journey."
Industry observers were overwhelmingly positive about the Budget, with many commenting on the expanded National Productivity Fund and the new Enterprise Compute initiative. These developments were often linked to Singapore's AI ambitions.
Benefits for smaller enterprises
Yogesh Sangle, Global Head of Instarem, focused on how the Budget benefits small and medium-sized enterprises (SMEs).
"The S$3 billion top-up to the National Productivity Fund is another strong step towards enhancing Singapore’s competitiveness. Supporting high-quality investments will help drive technology and innovation, and we’re hopeful that SMEs will have access to resources that enable them to scale, digitise, and stay competitive. Grants for AI adoption and automation could further accelerate SME productivity, complementing this investment," he said.
"Overall, this Budget lays a solid foundation for SME growth, and we look forward to seeing continued initiatives that empower businesses to innovate, thrive, and contribute to Singapore’s economy."
"In addition to leveraging financial schemes, such as the National Productivity Fund, to build new digital capabilities, success will hinge on the ability of SMEs to make the most of the consultancy services provided through the government’s new Enterprise Compute Initiative. This programme grants them access to expert guidance that can guide their efforts, helping businesses integrate AI tools effectively, ensuring technology investments are maximised."
According to HubSpot's Dan Bognar, VP & MD, JAPAC, the Budget's enhanced support for SME digitalisation arrives at a critical moment, when businesses must accelerate their digital transformation. "The new Enterprise Compute Initiative, combining financial support with expert guidance, addresses the crucial need for practical AI adoption support among Singapore businesses.
"In today's fast-paced digital economy, time is of the essence. The average Singapore business switches between more than 50 applications when managing customer interactions - this slows teams down, fractures customer experiences and fragments the insights businesses have access to. This ongoing challenge is holding companies back from achieving total value from their technology and reaping the benefits of AI," Bognar said.
"SMEs need solutions that deliver immediate impact. I’m pleased to see the refreshed National Productivity Fund can help SMEs adopt digital tools that are easy to implement, fast to integrate, and unified across teams, enabling transformative results from enhanced customer engagement to significant productivity gains."
“Singapore’s $3 billion National Productivity Fund in Budget 2025 presents a key opportunity for organisations to rethink technology and innovation. In today’s fast-paced world, incremental improvements enable sustainable scaling while maintaining agility," noted Christanto Suryadarma, VP for Southeast Asia (SEA), South Korea and Channel APJeC,
Zebra Technologies.
"With this support, practical AI applications will drive automation, efficiency, and measurable business impact. Workforce productivity also depends on equipping employees across generations, requiring a tailored approach to meet diverse needs."
"AI’s evolution is shifting toward augmented intelligence, seamlessly integrating cloud and on-device solutions. Take Zebra AI Companion for example - with the support of the government, more local companies will be able to leverage similar solutions and augment the workforce. The future lies in leveraging both to empower frontline teams with the right tools for success,” Suryadarma added.
"Among the new announcements, the Enterprise Compute Initiative stands out as a game-changer, reinforcing enterprises with critical AI tools, computing power, and expert consultancy capabilities via partnerships with major cloud service providers. The government’s investment in AI infrastructure is commendable, and pairing it with open source AI’s rich ecosystem of tools and frameworks allows businesses to tailor solutions without the burden of proprietary software costs.
"This empowers businesses to leverage AI more effectively in the age of Smart Nation 2.0. By working with cloud service providers to support businesses with the necessary access and resources, Singapore can position itself to continually drive productivity and growth," noted Gayathri Peria, SUSE's GM for Southeast Asia.
Niko Walraven, Area VP APAC, Neat said: "Singapore’s Budget 2025 has been designed to bolster the country’s technological infrastructure and foster lifelong learning and innovation. Programmes like the Enterprise Compute Initiative and a strengthened National Productivity Fund can be powerful catalysts to truly accelerate Singapore's continued efforts in driving a strong culture of innovation.
"With robust R&D investments and large-scale infrastructure projects in the pipeline, innovation thrives when individuals and businesses are empowered to freely collaborate and exchange ideas. Therefore, it’s essential for businesses to stay ahead by making strategic technology investments that not only streamline operations but also drive productivity, creativity, and collaboration."
"The government’s commitment to provide tech and AI access to help more companies is aligned with SAP’s commitment to help more Singapore organisations Accelerate to Innovate with greater agility and resilience, ensuring that organisations of all sizes and industries can leverage new technologies for growth," she said.
"In particular, the S$150 million earmarked under the Enterprise Compute Initiative mirrors SAP’s expanded Digital Innovation Accelerator initiative to boost the adoption of industry-specific AI in Singapore, announced in October last year."
Siow added that the success of business AI hinges on more than enterprise applications alone. "At SAP, we believe that AI should be responsible, relevant, and reliable, and this is only possible with high-quality data. Only by ensuring a robust data backbone that harmonises data siloes from across the whole organisation can business extract real-world, actionable insights from AI," she said.
Edmund Heng, Partner, Technology Risk, KPMG in Singapore said: "As Singapore advances its AI innovation agenda, robust governance is essential to ensuring responsible and sustainable growth. Businesses should leverage the Enterprise Compute Initiative to implement AI governance tools and frameworks, while the Workforce Development Grants can help strengthen technical competencies across the Three Lines of Defense, reinforcing oversight of AI systems.
"Collaboration is also key—businesses should engage with industry partners and government initiatives like AI Verify to exchange best practices and stay informed on evolving responsible AI standards. These efforts will enhance Singapore’s AI ecosystem and further establish the nation as a trusted global technology hub."
Jess Ng, Country Head, Singapore and Brunei, Fortinet commented: "Singapore Budget 2025 reaffirms the country’s ambition to cement its position as a global digital hub. The S$150 million Enterprise Compute Initiative is a timely investment, enabling businesses to harness AI and cloud computing to drive innovation and scale rapidly.
"However, with greater digitalisation and AI adoption comes an expanding attack surface, making cybersecurity more complex. Cybercriminals are increasingly leveraging AI to automate attacks, craft sophisticated phishing and deepfake scams, and target critical infrastructure—combining cyber and physical threats to maximise disruption."
"Addressing these evolving risks requires an AI-powered security approach that enables real-time threat detection, automated response, and proactive defence. Strengthening digital infrastructure, investing in cybersecurity solutions, and upskilling the workforce—particularly in AI-driven security—will be crucial to enhancing our digital resilience," Ng concluded.
Fabio Tiviti, Group VP, APAC & Japan Field Operations, Workday, noted that AI will continue to be a key driver in nurturing Singapore’s competitive advantage. "Such technologies are catalysts for economic growth and business productivity setting the stage for Singapore to strengthen its position as a global hub for innovation. The new Enterprise Compute Initiative will therefore play an integral role in enabling businesses with the capabilities to swiftly make the relevant pivots and integrate AI into the various business processes and systems," he said.
"At Workday, we anticipate the continued rise of AI agents that will play a strategic role in amplifying office performance and productivity, allowing office workers to focus on higher value work. We strongly believe that AI is meant to augment, not replace humans. Unlocking the full potential of AI while uplifting employees will be the key to long-term success in the future workplace."
Suvig Sharma, Area VP (ASEAN), Confluent, said it is heartening to witness PM Lawrence Wong’s focus on local technology and upskilling investments to strengthen resilience and drive sustainable growth. "PM Wong’s S$150 million budget for the Enterprise Compute Initiative, which supports businesses to harness AI effectively around processes and systems, underscores the need to stay ahead of disruptive technologies.
"One of the key processes for AI is data management - the effectiveness of AI is deeply dependent on having clean and up-to-date data - similar to building better health by choosing fresh, wholesome foods marked with Singapore’s Healthier Choice symbol. High-quality data is what drives accurate insights and better business decisions. With data volumes growing daily and demand for real-time responses increasing, data streaming platforms will play a crucial role in powering AI applications with trustworthy, fresh data to deliver relevant results without hallucinations."
"Such initiatives present an opportunity to write a new chapter for Singapore’s enterprises, enabling them to not only future-proof their businesses but also grow on a global scale using the latest cutting-edge technologies.“
Brian Kealey, Country Leader, Salesforce Singapore, noted that the Enterprise Compute Initiative would
"go a long way in helping Singaporean companies unlock true value from
AI". "It complements the ongoing efforts to boost effective technology
adoption via industry partnerships such as the Data + AI Boost SME Programme run by Salesforce together with IMDA," he noted.
"Every
organisation and employee today has to do more with fewer resources,
leading to delays, inefficiencies and poor customer interactions. PM
Wong once again called for enterprises to invest in AI to enhance their
competitiveness and productivity. He also rightly underscored the
importance of AI solutions that are not just tailored to organizational
needs but also integrated into their business processes and systems,"
Kealey further observed.
"Unfortunately, often adopted solutions
like chatbots and copilots are outdated, struggle to provide accurate,
trusted responses to complex requests and cannot take action on their
own. To unlock new capacity, Singapore enterprises should turn to
autonomous AI agents — a limitless digital workforce — that can tap into
trusted organisational data, reason, and operate within existing
workflows to take action on behalf of overwhelmed teams."
Agentforce, Salesforce’s digital labour platform, helps companies build customisable autonomous agents across the business.
Digital transformation
Alex Teo, VP & MD of Southeast Asia, Siemens Digital Industries Software, commented that businesses should look at the bigger picture. "As manufacturers navigate shifting consumer preferences, being agile and responsive is crucial.
The Enterprise Compute Initiative, introduced in Singapore's Budget 2025, marks a significant step in strengthening the nation’s AI leadership and supporting smaller companies to innovate and address the skills gap challenge," he said.
"However, companies need a solid digital transformation strategy to fully harness AI’s potential. That goes beyond just focusing on the technology; it also focuses on reshaping business operations and establishing a conducive ecosystem to embrace it."
Teo elaborated that digital transformation unlocks data across the organisation, making information accessible to decision-makers. "It enables companies to gather and analyse data throughout the product and production lifecycle, enhancing transparency and understanding - essential for the integration of AI," he added.
"Digital transformation is a long-term endeavour. Companies that commit to this will set themselves apart from those just following trends."
Chiu Wu Hong, Partner, Head of Private Enterprise, KPMG in Singapore, said the Enterprise Compute Initiative will "further accelerate digital transformation and strengthen Singapore’s technological edge – benefitting the broader enterprise ecosystem". "By enhancing access to advanced AI and high-performance computing resources, this initiative empowers enterprises to harness cutting-edge technologies, drive innovation and enhance operational efficiency," he said.
"To fully capitalise on this new initiative, businesses should seek guidance from trade associations and chambers, relevant government agencies, or third-party professionals to navigate the grant application process effectively," Chiu added.
"With expert guidance, businesses can strategically leverage this newly available support to position themselves for long-term success in an increasingly AI-driven economy."
Chiu also said that the expanded National Productivity Fund would "create opportunities to leverage cutting-edge innovation, collaborate with world-class researchers, and break into global markets".
"The Budget's comprehensive approach to digitalisation positions Singapore's SMEs to compete in the global digital economy. By combining government support with the right technology choices, businesses can accelerate their digital transformation journey and quickly realise tangible benefits that drive sustainable growth," said Bognar.
Open source
The open source movement can also offer a multiplier effect to achieving strategic technology goals, Peria said. "It is a
collaborative, cost-effective approach that directly addresses the
challenges of rising operating costs, and maximises the impact of
government investment," she said.
"Reducing software licensing
fees frees up significant capital, allowing Singaporean businesses to
strategically invest in crucial growth areas like talent acquisition,
and international expansion. This is particularly important as Singapore
businesses navigate a challenging macroeconomic landscape.
"Beyond immediate cost savings, open source provides the agility and
dynamism essential for success on the global stage. Adapting to diverse
international markets and regulatory changes becomes smoother with open
source’s inherent advantages in customisability."
"Existing initiatives like Open Government Products are a testament to the belief that Singapore has in open source technology and its power to increase inclusivity, drive innovation, and build products that better serve our populace. SUSE looks forward to working with businesses, cloud providers, and policymakers to drive open innovation in the country’s enterprise ecosystem. By doing so, businesses can unlock new opportunities, grow with more dynamism, and reinforce Singapore’s global technology leadership,” Peria said.
Infrastructure
PM Wong added that Singapore must invest in world-class infrastructure and overcome resource constaints creatively. "Singapore thrives as a hub economy, facilitating the flow of people, capital, goods, and ideas. To sustain this position, we must ensure excellent connectivity with the rest of the world, both physically and digitally," he said.
In addition to providing attractive connections by sea and air, the country has 5G coverage island-wide, while the Nationwide Broadband Network is being upgraded to deliver speeds up to 10x faster, he said. "This will enhance digital connectivity for businesses and individuals," he commented.
Sustainability
PM Wong also revealed that the government is looking at meeting future energy demand sustainably. "The industries of the future – artificial intelligence, semiconductors, biopharmaceuticals – are highly energy-intensive," he said. "To meet these growing energy needs and to bring down our carbon emissions at the same time, we will need more clean power."
In the short term, low-carbon electricity can be imported from the region. "We are making progress on such electricity imports. We’ve started a pilot with Peninsular Malaysia, and expanded the capacity of a power trading initiative with Laos, Thailand and Malaysia," PM Wong said.
"By 2035, we expect that about one-third of our projected electricity demand can be met through electricity imports."
Energy resilience will mean that Singapore must also have domestic sources of clean power, PM Wong continued, suggesting nuclear energy as a possibility. He said that small modular reactors (SMRs) have better safety features than conventional reactors, and are likely to be more common.
"Presently, only a few SMRs have been deployed around the world, but many more could become operational by the end of this decade," he said.
"Interest in nuclear energy is also increasing worldwide. In our region, several countries are planning to include nuclear in their energy mix. Malaysia and Indonesia also have experience in nuclear technologies and have operated research reactors for some time. We will therefore study the potential deployment of nuclear energy in Singapore."
"Be it electricity imports, hydrogen or nuclear, we will need to make major investments in new infrastructure. And that’s why we established the Future Energy Fund last year. I will top up the Fund by S$5 billion. This will further support our critical undertaking to secure clean power for Singapore."
"Singapore’s decision to top up the Future Energy Fund by S$5 billion underscores a commendable commitment to clean energy as a foundation for long-term energy security. While achieving this goal will take years, prioritising clean energy signals a forward-looking approach to addressing global energy challenges," said Deven Chhaya. Partner, Infrastructure Advisory, KPMG in Singapore.
"Innovation must remain at the heart of these efforts, as the global race to solve critical problem statements in energy will determine the leading players in tomorrow’s market. By staying focused on breakthroughs in clean energy solutions, Singapore is well-positioned to strengthen its competitiveness and establish itself as a leader in the sustainable energy transition."
"The S$150 million allocation for a new Enterprise Compute Initiative to help businesses harness AI more effectively will be a tremendous boost for AI development in the country but we would like to see greater scrutiny into the energy consumption of data centres. This will also contribute to the country’s carbon goals."
SAP's Siow noted that sustainability is another defining theme of Budget 2025 as Singapore continues to set its sights on becoming net-zero by 2050. "Businesses across all industries must align with this momentum – not just for compliance, but for competitive advantage. By embedding ESG into core business operations, such as through real-time carbon accounting, responsible supply chains, or energy-efficient operations, enterprises can turn sustainability into an engine for innovation and growth," she advised.
"Fundamentally, Budget 2025 underscores the importance of aligning skills, industry-tailored business AI, and commitment to sustainability – an approach that I believe is critical to unlocking the full potential of an AI-enabled Southeast Asia," Siow concluded.
"Through public-private collaboration and targeted investments, Singapore has the opportunity to anchor itself as the regional hub for cutting-edge technologies, digital talent, and sustainable business models. When we pair this commitment to innovation with reliable data, responsible AI deployment, and workforce development, we achieve a virtuous cycle where technology not only benefits enterprises, but also empowers neighboring countries, uplifts communities, and drive collaborative growth across the region.
"In this sense, the Budget provides a strategic roadmap, one that encourages us all to accelerate to innovate and ultimately secure long-term growth and resilience for Singapore and the entire region."
Explore
KPMG has shared its views on the Budget in a white paper, Insights into the Singapore Budget 2025, layer by layer.
Hashtag: #SGBudget
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