×
How SMBs and AI adoption are driving Singapore’s robust digital economy
Written by
Published on
Join our daily newsletter for breaking news, product launches and deals, research breakdowns, and other industry-leading AI coverage
Join Now

Singapore’s digital economy thrives: Singapore’s digital economy has maintained a significant 17.7% share of the country’s GDP, with small and midsize businesses (SMBs) and artificial intelligence (AI) playing crucial roles in driving growth.

Key economic indicators:

  • The digital economy contributed SG$113 billion ($85.31 billion) to Singapore’s GDP in the previous year
  • It accounted for SG$1 of every SG$6 in the country’s total economic output
  • The digital economy’s compound annual growth rate of 11.2% between 2018 and 2023 nearly doubled the nominal GDP growth rate of 5.8% for the total economy

SMB adoption of digital technologies:

  • 94.6% of SMBs have adopted digital technologies in more than one of six key areas, including AI, cybersecurity, cloud, and data analytics
  • SMBs using the government’s Productivity Solutions Grant reported average cost savings of 50% between 2018 and 2023
  • The CTO-as-a-service platform offers 400 pre-approved digital solutions, with 145,000 users to date

AI integration and growth:

  • 20% of pre-approved solutions on the CTO-as-a-service platform are AI-enabled
  • IMDA plans to increase this figure and encourage an additional 15,000 SMBs to adopt AI solutions over the next two years
  • AI adoption rate among SMBs increased from 3.5% in 2018 to 4.2% in 2023
  • Larger enterprises in Singapore have seen AI adoption rise from 16.7% in 2018 to 44% in 2023

Generative AI sandbox for SMBs:

  • A sandbox environment specifically catering to SMBs was introduced in February 2024
  • The second iteration, set to launch in December, will feature 15 curated generative AI solutions across various market segments
  • Over 300 SMBs are expected to leverage the sandbox, with eligible applicants receiving up to 50% funding support for three-month trials
  • 80% of the 150+ participants from the first sandbox run continue to use the generative AI applications after the trial period

Technology sector growth and future outlook:

  • The technology sector is growing at more than twice the rate of the rest of the economy, at slightly over 11%
  • IMDA Chief Executive Lew Chuen Hong emphasizes the need for all companies, especially SMBs, to embrace digital opportunities for growth
  • Despite global economic uncertainties, technology is expected to remain a long-term structural driver for growth

Strategic focus on AI:

  • AI is recognized as having significant long-term potential across all sectors
  • Singapore aims to invest strategically in AI to maximize its advantages as a small country
  • The government is committed to supporting companies in leveraging AI technology effectively

Broader implications: As Singapore’s digital economy continues to outpace overall economic growth, the country’s focus on supporting SMBs and fostering AI adoption positions it as a leader in the global digital landscape. The government’s proactive approach to providing resources and funding for digital transformation suggests a long-term commitment to maintaining Singapore’s competitive edge in the rapidly evolving tech-driven economy.

How Singapore's SMBs and AI sustain a robust digital economy

Recent News

AI agents and the rise of Hybrid Organizations

Meta makes its improved AI image generator free to use while adding visible watermarks and daily limits to prevent misuse.

Adobe partnership brings AI creativity tools to Box’s content management platform

Box users can now access Adobe's AI-powered editing tools directly within their secure storage environment, eliminating the need to download files or switch between platforms.

Nvidia’s new ACE platform aims to bring more AI to games, but not everyone’s sold

Gaming companies are racing to integrate AI features into mainstream titles, but high hardware requirements and artificial interactions may limit near-term adoption.