The Singapore Budget 2024, announced on 16 February 2024 by Deputy Prime Minister Lawrence Wong, comes at a critical juncture when the nation is facing an increasingly uncertain and polarised external environment and subdued economic growth. Amid the announcement of financial and technical support provided, the key tenets of this year’s Budget remain to build on Singapore’s competitive advantage and ensure that its citizens are equipped with the right skills for industries that will thrive in the future. Klareco’s Insights consists of our analysis of the Budget’s impact on the business community, as well as industry perspectives through our client work.

Extending Singapore’s role as the region’s financial hub

Singapore announced that it will further invest $2 billion in the financial sector to empower the Monetary Authority of Singapore with additional resources, thereby enhancing the country’s leadership in the financial services sector. The scope of this investment extends beyond the traditional core areas of banking and capital markets, encompassing emerging sectors such as fintech and green finance.

The recent flow of capital into Singapore is partly aided by geopolitics. However, Singapore’s strategic positioning, robust regulatory framework, as well as stable political environment cement its attractiveness as a financial hub. The country’s thriving ecosystem for alternative investments and its growing status as an Asian hub for private equities (PE) and venture capital (VC) further amplify its appeal. The new budget demonstrates Singapore’s clear commitment to nurturing a diverse and forward-looking financial sector, poised to seize opportunities in an evolving global economic landscape.

Continued Investment in Human Capital

Upskilling initiatives through SkillsFuture is a key component of Budget 2024. This is in line with ensuring that Singaporeans are equipped with the right skills to benefit from future growth. The latest SkillsFuture initiatives showed a refinement of Singapore’s approach towards lifelong learning. The additional S$4,000 in SkillsFuture credits for mid-career workers aged 40 and above are tied towards industry needs i.e. such as processing and analysing data and higher quality learning outcomes e.g. attaining diplomas. This represents a shift from the current short-term courses that have more varied and perhaps less tangible outcomes.

Recognising the dual responsibility of individuals and companies in encouraging lifelong learning, the Budget also encouraged employers to invest more in their employees’ training with supporting initiatives such a top-up of S$4 billion to the National Productivity Fund (NPF) to help industries and companies build new capacities and upskill workers. Higher learning institutions in Singapore have already began partnering with companies to upskill and reskill workers but there are more much that could be done to get more companies on board to create partnerships with learning institutions.

Singapore’s Quest as a Technology Powerhouse

The new budget reflects Singapore’s ambition to move away from merely an AI adopter to being a key node in the global AI industry. The government has allocated $1 billion over the next five years to the National AI Strategy 2.0 that will not only enhance AI capabilities but also position Singapore as a Global Centre of Competency in AI. Bolstering Singapore’s position as an international hub for data centres and the manufacturing of semiconductors is also part of its strategy.

The country’s goal to enhance broadband network bandwidth to 10 gigabits per second (Gbps), which is 10 times faster than the current speed, will also facilitate the adoption and deployment of AI and other advanced technologies.

This holistic approach, complemented by a range of initiatives to invest in human capital and productivity, underlines Singapore’s ambition to not only utilise but also positioning itself at the heart of the global AI industry development so that the country can benefit from this emerging tech frontier.

Singapore’s Sustainability Agenda

Singapore’s Budget 2024 marks a significant step towards sustainability and energy transition. The key challenge for many larger corporations in Singapore is managing their Scope 3 emissions. The government recognises the considerable challenge and expense involved in this energy transition. A key focus of the budget is supporting small and medium enterprises (SMEs), which constitute 90% of Singapore’s enterprises and contribute to around half of its business emissions. Many SMEs lack the resources to adopt sustainable practices, making their transition vital for reducing the nation’s carbon footprint. To aid this, the Energy Efficiency Grant will be expanded to include sectors like manufacturing, construction, maritime, data centres, and their users. Furthermore, the budget emphasises the role of partnerships with multinational enterprises through the Partnerships for Capability Transformation scheme.

Challenges and Opportunities Ahead

The path forward, undoubtedly marked by challenges, is also ripe with opportunities. The Budget reflected that the Singapore government is acutely aware of the global challenges that lie ahead, urging moderation in expectations and acknowledging the need for a collective effort. While government initiatives provide crucial support, the successful navigation of these challenges requires concerted action by individuals, companies and industries across the whole nation. Companies are encouraged to fully explore the support provided by the government, adapting to the evolving external environment to not only stay competitive amidst the evolving external environment and contribute meaningfully to Singapore’s overarching goals of sustainability and economic resilience.