Singapore Budget 2025: S$3 billion National Productivity Fund boost for efforts to drive tech and innovation

Some S$3 billion has been committed to attract high-value technology investments, improve business productivity, and train workers to fuel Singapore’s economic growth engines.

The top-up made for the National Productivity Fund is expected to help Singapore compete in new frontier areas including artificial intelligence (AI) and quantum computing, Prime Minister Lawrence Wong said in his Budget speech on 18 February.

“We will enhance our technology and innovation engines. This is crucial because new ideas, innovation, and technological progress are the drivers of growth,” he said.

“We see this in the US, where the technology sector – powered by Silicon Valley and companies like Apple, Amazon, Alphabet, and Tesla – has helped to propel the country’s dynamism and innovation.”

Singapore may not operate at the same scale as the US, but it can still excel, riding on its track record.

For instance, Singapore is home to top tech companies such as Sea, Razer, and Grab, which are well-established in the region and are keen to expand beyond Singapore, particularly in AI and quantum computing, said PM Wong.
 

Even as Singapore’s economy grew by more than 4 per cent in the past year, Singapore cannot afford to stand still amid intensifying global competition and must focus on activities that generate value and help local services stand out, said PM Wong, who is also Finance Minister.

“At this stage of development, we can no longer compete on cost alone,” he said, adding that Singapore’s strategy of efficiency and innovation must adapt to changing circumstances. “Instead, we must differentiate ourselves by producing high-value solutions for the world.”

“We cannot afford to outbid the major economies, but we will need to set aside sufficient resources to maximise our competitive strengths,” he added.

The National Productivity Fund was established in 2010 to support a slew of measures for enterprises to improve productivity and train workers. Its scope was expanded in 2023, backed by a S$4 billion top-up at the time, to drive investment in specific sectors in Singapore, such as from multinational enterprises.

The investments will help local players lead the charge in innovating in AI and quantum computing, among other areas.

Investment into AI and quantum computing will also spur development in other industries where Singapore excels, including in semiconductors and biotechnology.

For instance, Singapore supplies more than a tenth of chips and produces 20 per cent of semiconductor equipment worldwide, said PM Wong.

He said the Republic is also a key node for the life sciences sector, producing more than 80 per cent of the world’s DNA chips, which are used in identifying diseases. PM Wong added that eight of the world’s top 10 pharmaceutical firms have set up manufacturing operations here.
 

As an example of how high-quality investments can spur economic opportunity, PM Wong cited the case of US MedTech firm and DNA chip-maker Illumina, which set up its regional headquarters and a manufacturing site in Singapore.

Illumina’s genome sequencer, which was designed and manufactured here, was instrumental in allowing scientists globally to develop vaccines when COVID-19 first emerged.

“Illumina’s presence has benefitted other Singapore enterprises,” said PM Wong, citing tech services provider Venture Corporation and manufacturing firm Sunningdale Tech, which partnered Illumina to develop new services.

Sunningdale Tech, for example, provided critical components for Illumina’s DNA sequencing kits, and tapped other local enterprises for services like the procurement of packaging.

Separately, another S$1 billion will be spent to build a new national semiconductor research and development fabrication facility here, and refresh Singapore’s public biosciences and MedTech research infrastructure in one-north, said PM Wong.

The new national semiconductor facility will provide industry-grade tools for researchers and industry partners to test new semiconductor innovations.

Meanwhile, the upgraded one-north will offer state-of-the-art research facilities to foster greater collaboration and speed up the commercialisation of public biosciences and MedTech projects.

Investments in the sector have borne fruit, said PM Wong, who referred to the nation’s investments in the Biopolis enterprise park in one-north, built more than 20 years ago.

“It served as a platform for biotech talent to gather and share knowledge – knowledge that then diffused into our education system, uplifting a new generation of Singaporeans.”
 

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.