Recently, Singapore's Prime Minister and Minister for Finance, Lawrence Wong, unveiled the nation's budget proposal for the fiscal year 2025. This budget, encapsulated with the theme “United Towards the Future,” places a significant emphasis on economic innovation and improving the quality of life for its citizensIt sets a clear trajectory for Singapore's development over the next year while addressing the challenges that lie aheadThis budget introduces a range of policies focused on livelihoods, employment, business growth, and environmental sustainability, aimed at enhancing social resilience, stimulating economic growth, and forging a more sustainable future.

For the fiscal year 2025, which spans from April 1, 2025, to March 31, 2026, the overall expenditure is projected at S$143.1 billion (approximately ¥775 billion) which constitutes 18.7% of Singapore's GDPThe forecasted surplus stands at S$6.8 billion, equivalent to 0.9% of the GDPThe Ministry of Finance previously estimated that by the end of 2030, Singapore’s finances could maintain a rough balance between income and expendituresWong stated that this year’s budget further advances the ‘Singapore Together’ agenda, amalgamating people’s ideals and perspectives with a dedication to preserving social cohesion and unity.

At present, sectors like semiconductors, artificial intelligence, biotech, and the green economy are pivotal not only to Singapore’s economic innovation but also serve as vital drivers of advanced manufacturing and overall economic growthSingapore stands as a major player in the global semiconductor industry, supplying over 10% of the world’s chips and 20% of semiconductor equipmentFurthermore, it is recognized as a key center for life sciences, with eight out of the top ten pharmaceutical companies globally conducting manufacturing activities in SingaporeIn addition, the country is a leading producer of advanced medical equipment.

The budget outlines that the Singaporean government aims to bolster business competitiveness through three main avenues: enhancing technology and innovation, refining the business ecosystem, and increasing infrastructure investments

Advertisements

By leveraging these strategies, the government seeks to boost economic vitality and ensure stable economic growth.

To enhance technology and innovation, Singapore plans to inject an additional S$3 billion into the National Productivity Fund, focusing on supporting research and development investments within the tech and innovation sectorsOver the past two years, Singapore has already allocated over S$6 billion to this fund, aimed primarily at aiding local businesses in improving productivity and supporting ongoing education and training to elevate workforce qualityIn 2023, the uses of the National Productivity Fund were broadened to attract more high-caliber multinational corporations to invest in SingaporeThrough various incentive policies, the government hopes to lure quality cross-border investments into industries like advanced manufacturing, the green economy, and the digital economy, sectors that are both high-growth and high-value.

Moreover, an investment of approximately S$1 billion is planned for research-related infrastructure development this year to maintain Singapore's position at the forefront of global innovationInvestments will primarily focus on semiconductors and biotechnologyIn the semiconductor sector, Singapore intends to build a new national semiconductor research and innovation manufacturing facility to offer a platform for researchers and industry collaborators, facilitating prototype development and new product testingFor biotechnology, the government will update the public biotechnological and healthcare research infrastructure at the One-North technology park to provide researchers and businesses with an enhanced working environment and research capabilities.

To fortify the business ecosystem, the Economic Development Board of Singapore is set to introduce a Global Entrepreneurs Program, encouraging international entrepreneurs to establish and grow new ventures in SingaporeThe government recently announced the extension of existing assistance programs aimed at supporting companies with internationalization and mergers and acquisitions, complemented by an allocation of S$150 million for new initiatives

Advertisements

These initiatives are geared towards enhancing Enterprise capacity in utilizing artificial intelligence tools and information technologyIn addition, there will be a focus on encouraging substantial investments in key economic sectors and new growth areas, including the establishment or expansion of manufacturing facilities, innovation, research and development activities, and supporting businesses’ green transitions to increase their value.

The new funding initiative will enable qualifying companies to collaborate with major cloud service providers to access artificial intelligence tools and receive professional consultancy services, aiming to optimize AI utilization during their digital transformation journeyFurthermore, the government plans to launch a private credit development fund, approximately S$1 billion in size, to provide high-growth businesses with more funding avenuesCompanies that opt to list and grow their operations in Singapore will benefit from tax incentives, and fund managers who significantly invest in Singapore-listed stocks will also be granted tax relief.

On the infrastructure front, the government will inject an additional S$5 billion into the Changi Airport Development Fund, ensuring that Singapore has sufficient resources to develop its aviation hub furtherPlans are underway to commence construction of the fifth passenger terminal at Changi Airport, which is expected to increase the airport capacity by over 50%, further solidifying Singapore’s status as a critical global gateway for travel and tradeTo lower borrowing costs associated with the development of the fifth terminal, the government will provide guarantees to the Changi Airport Group.

The new fiscal year budget also underscores the expansion of clean energy usage in response to the growing energy needs and to reduce carbon emissionsSingapore is preparing to inject an additional S$5 billion into the Future Energy Fund established last year, which seeks to enhance access to clean energy

Advertisements

The Future Energy Fund aims to harness government-provided catalytic funds to assist companies in executing a sizable national energy transition plan over the next 20 years, steering the energy system towards a diverse mix that includes solar energy, regional grids, and emerging low-carbon alternatives, moving away from nearly complete reliance on natural gas.

Emerging fields such as artificial intelligence, semiconductors, and biopharmaceuticals not only represent areas of concentrated development in Singapore over the years but are also energy-intensive industriesTo address the rising energy demands and mitigate carbon emissions, Singapore recognizes the essential need for more clean energy sourcesOne of the critical challenges for sustainably achieving long-term development in Singapore will be addressing clean energy securityWong indicated that the government would not rule out the possibility of utilizing nuclear energy, exploring the feasibility of deploying nuclear capabilities locally, and taking further steps to systematically enhance Singapore's proficiencies in the nuclear sector.

In recent years, Singapore has successfully achieved high levels of economic growthAmidst increasingly fierce international competition, to continue averaging a growth rate of 2% to 3% annually over the next decade and further elevate the job opportunities and living standards for Singaporeans, the government has committed to maintaining sound monetary and fiscal policies, harnessing market forces to drive efficiency improvements and robust innovation, remaining open to talents and ideas that can propel national development, and deepening tripartite partnerships among labor, employers, and the government as a foundation for economic stability.

This year's budget proposal has also been dubbed the "People's Budget" for its considerable focus on innovative economic policies while emphasizing care and improvement of livelihoodThe Singaporean government intends to address six principal areas to alleviate cost of living pressures, advance the frontiers of growth, provide lifelong upgrading opportunities for the workforce, build sustainable urban environments, cultivate a caring and inclusive society, and foster national unity

Advertisements

Advertisements