Singapore’s Bold Push for AI and R&D to Secure Economic Future

Singapore is setting its sights on a transformative future, with ambitious plans to integrate artificial intelligence (AI) on a massive scale across key sectors and to launch groundbreaking research and development (R&D) programmes. These initiatives, previewed by Deputy Prime Minister Heng Swee Keat during the Budget debate in Parliament on 27 February 2025, form part of a broader strategy to safeguard the city-state’s economic resilience amid accelerating geopolitical and economic shifts. As global challenges like political polarisation, climate change, and rapid technological advancements loom large, Singapore is positioning itself to not only weather the storm but to emerge as a leader in innovation and enterprise.

A Dual Strategy for Growth

At the heart of Singapore’s vision is the Research, Innovation and Enterprise (RIE) 2030 plan, which DPM Heng described as a critical pillar in securing the nation’s future. The plan prioritises two major initiatives: the large-scale application of AI in sectors such as healthcare, education, finance, advanced manufacturing, logistics, and transport, and the introduction of new R&D programmes under the banners of “RIE Flagships” and “RIE Grand Challenges.” These efforts aim to drive economic growth that creates high-quality jobs while addressing national and global priorities.

The push for AI is already underway, with initiatives like the $120 million AI for Science programme launched in October 2024. This project supports researchers in harnessing AI to accelerate discoveries in fields such as advanced materials and biomedical sciences. DPM Heng emphasised that applied AI will revolutionise key industries, enhancing efficiency and unlocking new opportunities. For instance, in healthcare, AI could enable precision medicine tailored to individual needs, while in logistics, it could streamline operations amid global supply chain disruptions.

The RIE Flagships and Grand Challenges, meanwhile, are designed to tackle both economic and societal issues. The first Grand Challenge will focus on “healthy and successful longevity,” addressing the challenges and opportunities of an ageing population—a pressing concern for Singapore as its demographic profile shifts. The first Flagship project will advance semiconductor and microelectronics R&D, a sector critical to Singapore’s role as a global technology hub. While further details are yet to be announced, DPM Heng underscored that these programmes will tighten the links between research, commercialisation, and real-world application, fostering new products, companies, and solutions.

Investing in the Future

Singapore’s commitment to RIE is backed by significant financial muscle. The city-state has consistently invested around 1 per cent of its gross domestic product (GDP) annually in RIE activities, with $28 billion allocated for the RIE 2025 plan. According to DPM Heng, this investment has already yielded results, enhancing research talent and elevating the quality of research output in Singapore. Metrics such as research impact and entrepreneurship demonstrate the tangible benefits of this spending, positioning Singapore as a leader among small, advanced economies.

Responding to parliamentary queries, including from Ms Jessica Tan of East Coast GRC and Leader of the Opposition Pritam Singh, DPM Heng highlighted how RIE investments benefit Singaporeans directly and indirectly. Automation of routine tasks, for instance, frees up workers to focus on higher-value roles, while advancements in precision medicine promise better health outcomes. These benefits are not just economic but also social, reinforcing Singapore’s reputation as a forward-thinking nation.

However, challenges remain. DPM Heng noted that fewer companies are embarking on transformation projects due to near-term headwinds such as geopolitical uncertainties and rising costs. To counter this, Budget 2025 includes measures like the Enterprise Compute Initiative, SkillsFuture Enterprise Credit, a corporate income tax rebate, and the Progressive Wage Credit Scheme. These incentives aim to encourage businesses to innovate and transform, ensuring they remain competitive on the global stage.

Economic Transformation and Productivity Gains

Beyond RIE, DPM Heng outlined economic transformation as a key focus for Singapore’s future. Between 2016 and 2023, the city-state achieved a labour productivity growth rate of 2.1 per cent per annum, placing it among the top three small, advanced economies with comparable population size and GDP. This achievement reflects Singapore’s ability to adapt and thrive amid global challenges, a resilience forged through past crises like the Asian Financial Crisis, the Global Financial Crisis, and the Covid-19 pandemic.

“How can we ride these changes to create a better future for Singaporeans?” DPM Heng asked rhetorically in his speech. His answer lies in creativity and adaptability—finding opportunities in adversity to emerge stronger. This mindset underpins Singapore’s approach to economic transformation, which seeks to maintain high productivity while navigating an increasingly complex global landscape.

A robust enterprise and innovation ecosystem is another critical component of this strategy. DPM Heng stressed the role of regulatory agencies in attracting international players to test new solutions in Singapore, using the city-state as a springboard to the wider region. The Monetary Authority of Singapore (MAS), for example, balances its supervisory role with innovation, pioneering developments in sustainable finance. Such regulatory agility ensures that Singapore remains a magnet for global talent and investment, fostering a dynamic environment for growth.

Talent as the Bedrock of Innovation

Talent, both local and international, is the cornerstone of Singapore’s innovation ambitions. DPM Heng encouraged Singaporeans to leverage Budget 2025 schemes to upskill, particularly in areas that bridge business with science and technology. At the same time, he reaffirmed the importance of attracting global talent, likening the process to “steel sharpening steel.” Strong minds, he argued, inspire and challenge each other, driving progress.

To this end, the Economic Development Board (EDB) will launch the Global Founder Programme, designed to attract seasoned venture founders to establish impactful new ventures from Singapore. This initiative reflects the city-state’s openness to global collaboration, ensuring it remains a hub for cutting-edge ideas and enterprises.

Navigating a Turbulent World

The backdrop to Singapore’s ambitious plans is a world in flux. DPM Heng identified several global trends shaping the future: greater political polarisation, the existential threat of climate change, and the breakneck pace of technological advancement. These shifts present both risks and opportunities for a small, open economy like Singapore, which has historically punched above its weight through strategic foresight and adaptability.

Singapore’s response to these challenges is not merely reactive but proactive. By doubling down on AI and R&D, the city-state aims to position itself at the forefront of technological innovation, ensuring economic relevance in an era of disruption. The focus on longevity and semiconductors, for instance, addresses both immediate societal needs and long-term strategic priorities, reinforcing Singapore’s role as a global leader in niche but critical fields.

Moreover, the emphasis on economic transformation and productivity underscores a pragmatic approach to growth. Singapore recognises that maintaining its competitive edge requires constant reinvention, particularly in the face of geopolitical uncertainties that could disrupt trade and investment flows. Budget 2025’s support for businesses, from tax rebates to skills credits, is a clear signal of the government’s commitment to partnership with the private sector.

A Model for Small Economies?

Singapore’s RIE 2030 plan and broader economic strategy offer a potential blueprint for other small, advanced economies grappling with similar challenges. By balancing investment in innovation with regulatory flexibility and talent development, Singapore demonstrates how a compact nation can exert outsized influence on the global stage. Its ability to integrate cutting-edge technology like AI into everyday sectors—healthcare, education, logistics—could serve as a model for others seeking to modernise without sacrificing social cohesion.

Yet, questions linger about the scalability and inclusivity of these initiatives. While DPM Heng highlighted the benefits of automation and precision medicine, there is a risk that rapid technological adoption could widen inequality if not paired with robust retraining programmes. The government’s push for upskilling through Budget 2025 schemes is a step in the right direction, but sustained efforts will be needed to ensure that all Singaporeans can participate in the city-state’s high-tech future.

As Singapore charts its course towards 2030, the initiatives outlined by DPM Heng Swee Keat signal a bold and comprehensive vision for the future. The integration of AI across key sectors, coupled with targeted R&D programmes, positions the city-state to tackle both economic and societal challenges head-on. At the same time, investments in talent and regulatory innovation ensure that Singapore remains a global hub for enterprise and creativity.

While the road ahead is fraught with uncertainty—geopolitical tensions, climate risks, and technological disruption are ever-present—Singapore’s track record of resilience offers cause for optimism. If the city-state can harness the opportunities of this turbulent era, as it has done in past crises, it may well emerge not just stronger, but as a beacon for others to follow. For now, the focus remains on execution, with further details on the RIE Flagships and Grand Challenges eagerly awaited by policymakers, businesses, and citizens alike.