Budget 2026 may give firms more targeted, strategic support to navigate global uncertainty

[SINGAPORE] Rather than broad-based assistance, companies can expect more targeted and strategic support from Budget 2026 to help them navigate macroeconomic uncertainty and ongoing geopolitical tensions, said observers.

They highlighted artificial intelligence (AI), internationalisation, sustainability and cost management as key areas for increased government support, with the focus on helping businesses build capabilities in these fields to remain resilient and competitive.

Instead of introducing new programmes, existing schemes are likely to be enhanced or extended, they added.

Singapore Management University associate professor of law Eugene Tan expects Prime Minister Lawrence Wong to double down on AI, internationalisation and alleviating the costs of doing business, so as to ensure companies make “significant and necessary” progress on these fronts.

“These are not-so-new themes, but the imperatives are there if companies, especially small and medium-sized enterprises (SMEs), are to make the leap,” he said.

Observers also flagged that this year’s Budget is likely to build on the recent recommendations proposed by the Economic Strategy Review (ESR) committees, which are centred on global competitiveness, technology, entrepreneurship, human capital and economic restructuring.

The government is likely to share “concrete responses” on how it will implement and deliver on these recommendations, said OCBC chief economist Selena Ling.

More targeted support

Rohan Solapurkar, tax and legal leader at Deloitte Singapore, expects Budget 2026 to focus on strengthening Singapore’s economic resilience amid heightened geopolitical uncertainty.

“Compared with Budget 2025, we may see more targeted and execution-focused support aimed at helping companies adapt, transform and strengthen their underlying capabilities, rather than providing broad-based or direct hand-outs,” he said.

Amy Ang, Singapore head of tax at Ernst & Young Solutions, also believes Budget 2026 could be “incrementally more generous” in areas that align with Singapore’s strategic priorities.

This could mean higher co‑funding rates, wider qualifying scopes or simplified eligibility criteria, especially for projects that deliver “clear productivity gains”, adopt AI or strengthen the Republic’s economic position.

Though FY2025’s fiscal outcome “could be healthier than initially projected”, Ling said it is “more feasible” for Budget 2026 to target specific sectors and segments, as opposed to providing broad-based subsidies.

This is because there is no imminent crisis or recession, she said, noting that Singapore’s ageing population, with growing healthcare, defence and long-term infrastructure obligations, demands medium-term fiscal prudence.

“This also means that if global economic conditions worsen materially, there is scope for counter-cyclical cushioning,” she said.

Support for AI adoption, AI-related upskilling

Observers expect AI adoption to be a major focus of Budget 2026, with the government set to enhance support for enterprises.

Ang described this year’s Budget as a “pivotal moment” to accelerate and scale AI readiness among enterprises, in line with the ESR’s strategy to harness technology and innovation.

Ajay Kumar Sanganeria, partner and head of tax, and Harvey Koenig, partner and co-head of Base Erosion Profit Shifting Centre of Excellence at KPMG in Singapore, said Budget 2026 is likely to place a “strong emphasis” on AI, research and development and innovation as central growth drivers for Singapore.

But Dr Faizal Bin Yahya, senior research fellow at the Institute of Policy Studies, noted that many SMEs still face barriers – such as high adoption costs and lack of internal expertise – when it comes to AI and automation.

Budget 2026 could thus introduce co-funding for shared, anonymised data pools for SMEs to help them train AI models without high costs, he suggested. The Productivity Solutions Grant, which co-funds IT solutions and equipment to raise productivity, could also be enhanced to cover more AI-specific solutions.

Likewise, Sanganeria and Koenig said the government could provide SMEs with more access to shared AI infrastructure to lower the costs of AI experimentation and deployment. These could be paired with guidance on AI adoption to help firms identify ways for AI to “meaningfully” enhance their value chains.

As companies progress beyond initial AI pilots, Solapurkur believes there may be scope to consider how AI-related initiatives can better accommodate projects of differing scale and strategic impact, by adjusting their scope, time horizon and flexibility.

For instance, this could mean “further calibration” of the S$150 million Enterprise Compute Initiative introduced in Budget 2025, which allows eligible enterprises to tap cloud credits, related tools and consultancy services to develop a minimum viable AI product.

“As AI becomes more deeply embedded across business functions, the challenge for companies is shifting from experimentation to effective, scalable deployment,” he said.

Prof Tan said the focus will now lie on having companies use new technologies such as AI “more deliberately” and “intensively” to raise productivity and manage labour costs, while also exploring new growth opportunities.

To that end, AI-related support could involve workforce upskilling and job redesign, said observers.

Ang expects the government to roll out nationwide AI learning and upskilling initiatives for workers and management, while existing funds – such as the National Productivity Fund – could be topped up.

This could also help to ease labour costs. Ling noted that even as wage pressures are likely to reaccelerate this year, a pre-emptive loosening of the foreign labour policy is unlikely.

The government will instead retain its focus on productivity training, reskilling, job design and the adoption of technologies, which includes AI and automation, she said.

Companies can therefore expect workforce and reskilling support, which could come in the form of SkillsFuture Enterprise credits and training programmes on AI-related digital skills and green economy.

In addition, Sanganeria and Koenig said there could be support to accommodate new roles such as AI trainers, prompt engineers and integration specialists, alongside the launch of sector‑specific job transformation road maps.

Going abroad, going green

This year’s Budget is also expected to put renewed emphasis on internationalisation and sustainability, said observers.

Prof Tan said the focus of internationalisation would be on helping companies overcome the limits of Singapore’s small domestic economy and tapping growth opportunities abroad, especially in Asean.

Said Ling: “Given that Singapore remains an open economy heavily reliant on trade, FDI and wealth flows, internationalisation and supply chain diversification remains key.”

She expects stronger market access and internationalisation support, including enhancements to schemes that help firms scale abroad, participate in digital trade corridors and move up regional value chains.

Soft power tools – such as standards certifications, trade controls and digital economy agreements – may also “matter more” as companies navigate uncertainties in global demand and geopolitical risks, she said.

As for sustainability, Sanganeria and Koenig expect government funding for climate‑resilient infrastructure to continue. This will be supported by instruments such as public-sector green bonds.

Following the hike in carbon prices this year, Ling said companies could be given stronger incentives for energy-efficiency retrofits, carbon reporting capabilities and supply chain emissions compliance.

Mix of short-term and long-term aid

Observers expect a mix of short-term and long-term support measures for companies in Budget 2026.

Dr Faizal believes the government will take a “balanced approach” where it addresses immediate economic volatility and cost-of-living concerns – even as it prioritises long-term investments in AI, sustainability and workforce transformation.

Another priority in Budget 2026 will be to ease immediate cost pressures for businesses, said observers. This is where short-term relief measures come in.

Said Prof Tan: “Cost of doing business is a perennial bugbear, and the government will be keen to address this concern as it will affect Singapore’s position as a good place to do business.”

Noting that companies are seeking help to maintain cash flow and viability amid rising manpower, rental and energy costs, Dr Faizal said the 50 per cent corporate income tax rebate could be extended for the year of assessment 2026.

To address labour shortages, he said the government could ease foreign worker constraints in sectors such as construction and logistics by expanding the non-traditional sources occupation list. There could also be further incentives to hire and retrain senior workers.

Similarly, Sanganeria and Koenig said the government may roll out “selective, short-term interventions” to cushion immediate near‑term pressures.

For example, this could include incentives that support the hiring and training of fresh graduates in a challenging job market to help companies ease labour market tightness.

However, they expect the government’s emphasis to remain on longer-term initiatives that will help businesses “stay competitive and resilient”, particularly through innovation, skills development, sustainability and international competitiveness.

As Prof Tan sees it, Budget 2026’s measures will be geared towards helping companies grow and transform, with one-off or short-term goodies “kept to a minimum”.

“Companies will have to take the cue and purposefully adapt, so that they can tap the Budget’s (support) schemes to optimal effect,” he said.

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