Budget 2026: Business chambers want more help for SMEs to internationalise, bigger automation grants

[SINGAPORE] Trade associations and business chambers are pressing for more targeted support for small and medium-sized enterprises (SMEs) in Budget 2026, with several calls for coordinated overseas market entry and deeper automation incentives.

Several industry groups to whom The Business Times spoke raised tariff uncertainty, supply chain disruption and manpower constraints as key challenges heading into the new year.

While 2025 turned out better than expected – with front-loading in manufacturing and artificial intelligence (AI)-driven chip demand helping to lift growth – industry leaders said greater help is needed to support businesses in seeking new growth opportunities.

“Hunting in packs”

Several called for a more coordinated approach to helping SMEs enter foreign markets, rather than leaving firms to navigate unfamiliar territory on their own.

Neil Parekh, Singapore Indian Chamber of Commerce and Industry (SICCI) chairman, said there is a need for sector-specific business matching services in non-traditional markets such as Latin America, Africa and Central Asia, where most Singapore businesses have little presence.

“Provide SMEs with the services that MNCs (multinational corporations) create for themselves – institutionalise it and offer it to SMEs,” he said. He suggested that government agencies pick four sectors aligned with Singapore’s strengths, identify target buyers in specific countries such as Mexico, and “go deep rather than broad”.

He added: “For an SME, knowing about a country’s growth prospects is a nice read. But how am I going to really grow my business? That hand-holding is needed when you enter new markets.”

Funding mission trips

Singapore Manufacturing Federation (SMF) president Lennon Tan said some other Asian economies, particularly South Korea, do this well.

“A bigger company will bring along their supply chain or their associates, and they negotiate as a pack. Once they land, they bring a bunch over,” he said. “We don’t see this in Singapore as much.”

Overseas business missions are one way for businesses to seek new opportunities, but Tan noted that costs are a big barrier for many – especially SMEs – to participate.

Funding for trade association-led business missions is often limited, with only some expenses for official events qualifying for reimbursement.

“For SMEs, spending S$15,000 to S$20,000 on an exploratory mission to Mexico is not easy. But if it is sufficiently subsidised, they may go,” he said, adding that there are opportunities in Mexico given the goodwill between the two countries and demand for infrastructure and city management capabilities.

The automation gap

On the manufacturing front, Tan noted that most of its members have only automated up to a quarter of their processes, according to a recent survey.

He attributed part of this to the cap on existing grants. For instance, the S$150,000 cap on existing grants, like the Enterprise Development Grant, limits SMEs’ automation projects to small-scale areas such as packaging.

Fully automating the remaining 75 per cent of their process could cost in the region of more than S$1 million but the return would be significant.

He called for higher grant ceilings, interest-free loans or shared-risk arrangements for full-process automation, particularly for manufacturers in low-margin general industries.

Merger and acquisitions could also help with automation, noted Tan. Older business owners looking to retire could sell to younger entrepreneurs who, with greater volume, would find it more worthwhile to invest in full-process automation.

SICCI’s Parekh said there is an education gap. Many SME owners accept that change is coming since the arrival of generative AI tools, but do not know what it means for their specific business. He called for sector-specific assessments of AI’s likely impact.

“People will only take action when they realise it’s no longer a choice, or that it’s going to make business a lot more profitable,” he said.

Level playing field

The Singaporean-German Chamber of Industry and Commerce asked for measures that strengthen competitiveness and resilience amid global uncertainties. This includes a predictable framework that supports digital transformation, innovation and sustainability, said executive director Tim Philippi.

Philippi highlighted the need for a positive environment for further investment in research and development and digitalisation, noting that “these capabilities are essential for maintaining competitiveness in a rapidly evolving technological landscape”.

Singapore Semiconductor Industry Association executive director Ang Wee Seng hopes for support to accelerate advanced manufacturing – including research and development, pilot lines, equipment engineering, advanced packaging and SME-friendly testbeds that help local players move up the value chain.

Members also want to see continued investment in semiconductor talent pipelines, said Ang, from the Institute of Technical Education through to universities and mid-career pathways, alongside short, immersive programmes that strengthen the capabilities of educators and technicians.

For more of BT’s Budget 2026 coverage, go to bt.sg/budget26