AI adoption fuels growth of Singapore’s digital economy, growing to 18.6% of 2024 GDP
IMDA report says AI adoption rates among firms are up, bringing cost savings; workers say the tech has raised productivity and saved time
[SINGAPORE] Singapore’s digital economy accounted for 18.6 per cent, or S$128.1 billion, of the country’s gross domestic product (GDP) in 2024, up from 18 per cent in 2023, said the Infocomm Media Development Authority (IMDA) in a report released on Monday (Oct 6).
Growth was clocked in all sectors of the digital economy, with the non-information and communication sectors contributing more than two-thirds.
Finance and insurance remained the largest contributor outside of information and communication, followed by wholesale trade and manufacturing.
The adoption of artificial intelligence (AI) powered the growth. Adoption rates rose among small and medium-sized enterprises (SMEs); in 2024, 14.5 per cent of these smaller businesses adopted AI, up from 4.2 per cent the year before.
Among larger businesses, the adoption rate jumped from 44 to 62.5 per cent during the year.
SMEs which adopted AI-enabled solutions under the Productivity Solutions Grant administered by IMDA ran up average cost savings of 52 per cent in 2024. The figure was higher for SMEs adopting AI cybersecurity solutions – they made an average of 71 per cent in cost savings.
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Companies are also taking up AI solutions for specific domain areas such as human resources and accounting. More than half (52 per cent) of firms adopting AI did so.
The bulk of AI adopting firms – 84 per cent – used off-the-shelf generative AI tools. Customised or proprietary AI tools are being used by 44 per cent of AI adopting companies.
SMEs raised their digitalisation rate to 95.1 per cent in 2024, up from 94.5 per cent in 2023. These are SMEs which have digitalised at least one of the following six areas – cybersecurity, cloud, e-payments, e-commerce, data analytics and AI.
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Digital adoption intensity also went up, with SMEs using an average of 2.3 digital areas in 2024, up from two in 2023. Sector-specific digital solutions recommended by IMDA’s Industry Digital Plans (IDPs) also saw increased adoption, with 97 per cent SMEs adopting at least one sector-specific solution in 2024, up from 85 per cent the year before.
IMDA is looking to update its IDPs more frequently, moving from a previous iteration of a static document to a Web page that can be updated to factor in technological advancements. The agency is also moving from digital solutions based on a company’s maturity, to approaching it from the perspective of the problems that SMEs face.
Two IDPs for food services and hotels were recently refreshed, and IMDA aims to do this for five to six IDPS by the end of the year.
Tech jobs and AI use on the rise
Singapore’s tech workforce continued to grow, hitting 214,000 in 2024, from 208,300 in 2023. Roles related to cybersecurity, AI and data were among the fastest-growing; the growth in the tech workforce was driven mainly by the non-information and communications sectors.
There has been a shift in the type of skills demanded, from web development towards skills related to cloud and digital infrastructure.
IMDA attributes the growth to tech majors building tech out of Singapore, as well as non-tech companies building their own solutions.
Kiren Kumar, IMDA’s deputy chief executive, said: “A lot of companies in all sectors are driving digitalisation. They need to not just buy solutions, but to build their own and integrate solutions into their own organisations.”
AI use in the workplace is also rising. An IMDA survey found three-quarters (74.8 per cent) of workers using AI tools at work: 58 per cent used it for brainstorming and ideation, followed by writing and editing (54 per cent) and administrative tasks (42 per cent).
The majority of AI users (85 per cent) reported improvements in productivity, time savings and quality of work through the use of AI. About half of these users (48 per cent) used AI to enhance creativity, and a third (33 per cent), for learning.
Employers have also stepped up in providing support for employees to use AI at work. Seven in 10 AI users reported receiving support from their employers to use AI, with this support taking the form of training opportunities (62 per cent), access to paid AI tools (42 per cent) and clear guidelines and practices on AI use (30 per cent).
IMDA said that it is committed to building up Singapore’s digital infrastructure. The data centre power moratorium imposed in 2019 was lifted in 2022, but only 300 megawatts has since been allocated to new data centres. The regulator added that it would soon make announcements about the allocation.
“We will broaden and deepen our support for sectors, enterprises and talent to harness digitalisation and AI for innovation and productivity,” noted Kumar.
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