As Singapore gears up for Budget 2025, business leaders are calling for targeted support to accelerate AI adoption, especially among small and medium-sized enterprises.

While larger corporations are capitalising on early AI-driven efficiencies, SMEs often struggle to keep pace, widening the competitiveness gap.

The need for AI investments

Yogesh Sangle, global head of Instarem, highlighted the disparity: “SMEs face unique challenges when it comes to AI adoption.

“While larger organisations can capitalise on early gains, SMEs are often left playing catch-up. This results in increasing gaps in competitiveness.”

Sangle said Budget 2025 can bridge this divide through grants for AI training and implementation.

Subsidies enabling SMEs to experiment with AI tools – coupled with ongoing workforce upskilling initiatives – would be instrumental in ensuring smaller businesses do not fall behind.

Echoing these sentiments, Niko Walraven, area vice president APAC at Neat, said “workplace digital transformation remains vital for future-proofing business.”

Walraven noted that since SMEs form the backbone of Singapore’s economy, their ability to embrace technology and adapt to evolving workplace dynamics will be fundamental to maintaining the nation’s global competitiveness.

With Budget 2025 expected to prioritise job creation and skills development, tailored support for SMEs will be key in sustaining long-term economic resilience.

Also Read: Singapore Budget 2025: Upskilling plan for workers under way

Productivity through AI and digital solutions

Against a backdrop of rising economic pressures, small businesses cannot afford inefficiencies, said Koren Wines, managing director for Xero Asia.

“Leveraging technologies like AI, digital solutions, and data analytics can be key enablers for small businesses, helping them to unlock new levels of productivity, automate repetitive tasks, and gain critical operational insights to make smarter decisions,” Wines said.

The business leader hopes that Budget 2025 will introduce further measures to facilitate AI adoption, particularly in data-intensive domains like financial management.

Possible interventions could include expanded grants for digital solutions to alleviate cash flow constraints and mentorship programmes guiding SMEs in seamlessly integrating these technologies.

Meanwhile, addressing the digital skills gap is equally critical. Continuous upskilling and reskilling initiatives will empower SMEs to enhance their digital literacy and future readiness, reinforcing Singapore’s leadership in the digital economy.

The high cost of digital inertia

Dan Bognar, vice president and managing director, JAPAC at HubSpot, warned of the risks of lagging behind in AI adoption.

“The cost of inaction is high. Businesses lacking a unified platform to connect their data, customer information, and functional teams are losing out on opportunities to lead with data-driven decisions, along with profitability and efficiency benefits,” Bognar said.

HubSpot’s research indicates that the average Singapore business navigates more than 50 different applications to manage customer interactions.

Over 75% of Singapore businesses also feel they lack sufficient data to harness AI’s full potential, posing a major roadblock to widespread adoption.

This challenge is particularly pertinent as Singapore seeks to position itself as a global AI hub under initiatives such as the National AI Strategy 2.0.

To thrive in the digital economy, SMEs need solutions that are simple to adopt, swiftly implementable, and seamlessly integrated across teams and processes.

Providing these tools, alongside technical training, will not only strengthen individual businesses but also bolster Singapore’s reputation as a leader in digital transformation.

Also Read: Singapore economy surges in 2024, but 2025 brings cautious optimism

The role of AI in compliance and sustainability

Beyond operational efficiency, AI has the potential to reshape compliance and sustainability strategies.

Chris Roberts, partner at KPMG in Singapore, underscored the transformative impact of AI: “AI can revolutionise compliance and sustainability. Businesses need a cohesive AI strategy that addresses market growth, talent acquisition and retention, and increased productivity.”

As Singapore prepares for Budget 2025, the conversation around AI adoption is not just about technological advancement but also about economics.

The next step lies in strategic execution – turning these ambitions into reality.