Singapore’s journey to a better tomorrow

THIS year marks 10 years since the passing of Singapore’s founding prime minister Lee Kuan Yew. In the face of global political tensions, Singapore’s 4G leadership team must navigate an increasingly complex world order. Yet, despite these uncertainties, Singapore remains resilient. Inflation has receded, gross domestic product growth reached 4.4 per cent in 2024, and a January 2025 report by the Organisation for Economic Co-operation and Development praised Singapore’s budgeting framework for its fiscal sustainability, reinforced by a S$6.4 billion budget surplus in 2024 and a projected S$6.8 billion surplus in 2025. On the global tax stage, the inclusion of Indranee Rajah, second minister for finance, in International Tax Review’s “Global Tax 50” underscores Singapore’s ongoing contributions in shaping Beps 2.0.

Budget 2025 : Sustaining momentum

If Budget 2024 marked the first instalment of Forward SG programmes, Budget 2025 builds on this foundation while introducing new strategic moves. A key highlight is Prime Minister Lawrence Wong’s announcement of a programme to attract global founders to Singapore, reflecting the view that top-tier business leaders can strengthen Singapore’s economic positioning. Complementing this, a renewed focus on grooming local corporate leaders acknowledges the need to develop home-grown talent who can help champion Singapore’s interests amid the rise of AI.

The capital markets received a boost with the Monetary Authority of Singapore’s Equities Market Review Group’s proposals submitted on Feb 13 2025 for new tax incentives to spur listings and investments in Singapore’s equities market.

One measure is the introduction of the 5 per cent concessionary tax rate on qualifying fee income for new fund managers who list in Singapore. This could further anchor fund managers locally, leading to sustained deal-making and corporate fund-raising. Additionally, the new tax benefits for fund managers investing at least 30 per cent in local equities signal a commitment to invigorate Singapore’s capital markets. However, the extent of its impact remains uncertain, as such investment decisions are ultimately driven by risk and return profiles.

The corporate income tax rebate for new SGX listings of up to S$6 million per tax year seems significant, and could potentially attract companies to list in Singapore, to the extent that they base key economic activities in the Republic and derive Singapore taxable profits, such as those with Singapore headquarters or principal structures.

While a more vibrant SGX can draw global capital, the risk of increased short-term market volatility should be considered. The government’s calibrated approach to these incentives suggests an awareness of such risks.

The global race for AI dominance has intensified, with emerging large-language models from China underscoring the competitive landscape. Singapore has responded with a new national semiconductor research and development fabrication facility and a S$150 million Enterprise Compute Initiative to drive AI adoption among small and medium-sized enterprises (SMEs). This aims to improve access to computing resources, cloud partnerships, and expert guidance, but its success will hinge on making AI solutions practical and scalable for SMEs, which often face resource constraints.

The Johor-Singapore Special Economic Zone (JS-SEZ) has attracted significant interest in recent weeks, given its potential to enhance cross-border trade and workforce mobility. Budget 2025, while not introducing measures specific to the JS-SEZ, reinforces broader economic objectives. In Budget 2025, the government has extended the Mergers & Acquisitions scheme and Double Tax Deduction scheme for Internationalisation through to 2030. These incentives aim to encourage local businesses to expand overseas, either through new ventures or acquiring foreign companies. Paired with an extension of the enhanced grant cap for the Market Readiness Assistance Grant scheme and enhancements to the Enterprise Financing Scheme – which offer an increased loan quantum and coverage for equity and asset acquisitions – these measures reinforce Singapore’s commitment to fostering globally competitive businesses and potentially a pipeline of future SGX listings.

Together tomorrow

As global uncertainties persist, the themes for 2025 so far appear to revolve around the letter “T”. “Tariffs” continue to disrupt trade, while the “Top-up Tax” in line with Pillar Two guidelines remains a defining challenge, given the uneven implementation by major economies.

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Yet, for Singapore, “Together” and “Tomorrow” take precedence. As Singapore strengthens its social compact and positions itself amid global shifts, collaboration between businesses, policymakers and communities will be crucial in ensuring resilience and progress for a stronger tomorrow.

The writers are from Deloitte Singapore. Shariq Barmaky is country managing partner, and Daniel Ho is tax and legal leader. The views and opinions expressed are solely their own and do not reflect the opinions of Deloitte.