C. Advancing Our Growth Frontier

32. We will take bold and decisive actions to advance our growth frontier.
33. The Singapore economy now operates at a higher level. But we cannot afford to stand still. Global economic competition is intensifying. And many other countries and cities are pressing ahead. If we fail to stay competitive, we will be left behind. We must therefore redouble efforts to grow our economy, and keep it dynamic and vibrant.
34. Growth has a direct impact on the collective wellbeing of Singaporeans.
1. a. Last year, our economy grew by more than 4%. This meant higher wages and real incomes for many, many workers.
2. b. It will be hard to achieve 4% growth on a sustained basis. But if we can secure an average of 2% to 3% growth per annum over the next decade, we will be able to create better jobs and opportunities, and improve standards of living for all Singaporeans.
35. To achieve this, we must continue to uphold several fundamentals. That includes:
1. a. Maintaining sound monetary and fiscal policies;
2. b. Harnessing market forces to drive efficiency and innovation;
3. c. Staying open to people and ideas to strengthen our capabilities;
4. d. And deepening our tripartite partnership as a cornerstone of economic stability.
36. At the same time, our approach and strategy must adapt to changing circumstances.
1. a. At this stage of development, we can no longer compete on cost alone. Instead, we must differentiate ourselves by producing high-value solutions for the world.
2. b. To take our economy forward, this Budget will emphasise three key areas: technology and innovation, our enterprise ecosystem, as well as our infrastructure investments amidst resource constraints.

Enhancing our Technology and Innovation Engines

37. First, we will enhance our technology and innovation engines. This is crucial because new ideas, innovation and technological progress are the drivers of growth.
38. We see this in the US, where the technology sector, powered by Silicon Valley and companies like Apple, Amazon, Alphabet and Tesla, has helped to propel the country’s dynamism and innovation.
39. We don’t operate at the same scale as the US. But we can still excel in specific areas of innovation and technology.
1. a. We have a new generation of local tech companies like Grab, Sea and Razer, which have established themselves as regional or industry leaders.
2. b. We are home to the world’s top tech companies. They already have substantial activities here, and are keen to do more out of Singapore, including in new frontier areas like artificial intelligence (or AI) and quantum computing.
40. We also have considerable strengths in several industries.
1. a. We are a key player in semiconductors, supplying more than 10% of chips and producing one-fifth of semiconductor equipment worldwide.
2. b. Just as silicon chips fuel the tech industry, DNA chips are unlocking new frontiers in life sciences. These chips enable scientists to sequence DNA, which can be used to diagnose diseases or identify patient risks. They demand high levels of precision engineering, to implant millions of DNA strands onto a glass or silicon surface. Singapore alone produces more than 80% of the world’s DNA chips.
3. c. In fact, we are a key node for the broader life sciences sector. Eight of the world’s top 10 pharmaceutical companies have manufacturing operations here. We are also a major producer of advanced medical devices, including cardiac implants and hearing aids.
41. Take the example of American medtech company Illumina. It is the global leader in next-generation genetic sequencing instruments and DNA chips.
1. a. Illumina has a strong footprint in Singapore. We serve as its Asia-Pacific headquarters, and host a key R&D and manufacturing site here.
2. b. This is Illumina’s genome sequencer, which is designed and manufactured in Singapore. Engineers across different disciplines worked together to design this. When Covid-19 first emerged, it was such a machine that first sequenced the virus. It did so within hours, allowing scientists around the world to start developing drugs and vaccines.
3. c. Illumina’s presence has benefited other Singapore enterprises, like Venture Corporation and Sunningdale Tech. Their partnerships with Illumina have helped them to build new innovation capabilities and expand to new areas.
42. To enhance our technology and innovation engines, we have to anchor more high-quality investments. There have been attempts internationally through BEPS 2.0 to ensure that multinational enterprises (or MNEs) pay a minimum level of taxes worldwide, or to tilt the playing field in favour of governments. But in reality, MNEs wield considerable leverage and options. And that is why governments everywhere are still spending significant amounts to attract investments.
43. We cannot afford to outbid the major economies. But we do need to set aside sufficient resources to maximise our competitive strengths. So I will top up the National Productivity Fund by $3 billion.
44. Our R&D efforts are critical in powering our innovation and technology engines.
1. a. The Government has consistently invested about 1% of GDP annually in R&D over the last 20 years.
2. b. These investments have borne fruit. For example, our biotech ecosystem would not be where it is today without Biopolis, which we built more than 20 years ago. It also served as a platform for biotech talent to gather and share knowledge – knowledge that then diffused into our education system, which uplifted a new generation of Singaporeans.
45. To sustain this momentum, we must invest to keep our R&D infrastructure at the cutting edge.
1. a. For our biotech sector, we will refresh our public biosciences and medtech research infrastructure in the greater one-north area. This will provide state-of-the-art facilities, promote collaboration within our research community, and enable faster translation of research into commercial solutions.
2. b. In the semiconductor space, we will develop a new national semiconductor R&D fabrication facility. This will provide industry-grade tools for researchers and industry partners to prototype and test new semiconductor innovations.
3. c. These developments will cost about $1 billion.
46. We will also support companies that undertake R&D and innovation in partnership with other stakeholders. We have a good suite of schemes today, which we will further enhance. And more details are in the Annex to the Budget.

Strengthening our Enterprise Ecosystem

47. Second, we will strengthen our enterprise ecosystem.
1. a. Over the years, we have developed a stronger pool of globally competitive startups and enterprises.
2. b. But there is still more to be done.
48. We want Singapore to be a place where exciting ventures develop and grow into the leading enterprises of the future.
1. a. We already have a good pipeline of such promising enterprises. For example, AEM Holdings is a Singapore-headquartered provider of semiconductor testing solutions. Its products serve a critical role in the chip production process, by helping to detect manufacturing defects or design flaws. AEM today has a global footprint, with manufacturing plants and R&D teams across Asia, Europe, and the US.
2. b. We will provide more support for enterprises to scale up, execute their growth plans, and compete on the global stage. In particular, I will extend our support schemes for internationalisation, and for mergers and acquisitions. And again, the details are in the Annex to the Budget.
3. c. Some ventures are started by global companies, or by experienced entrepreneurs. As our investment promotion agency, EDB has close links with these multinational firms and entrepreneurs. So EDB will launch a Global Founder Programme later this year to encourage global founders to anchor and grow more new ventures in Singapore.
49. To succeed, all enterprises must invest in technology to enhance their competitiveness and productivity. Enterprises can adopt off-the-shelf solutions like AI-powered analytics and digital marketing tools. We will continue to encourage the adoption of such solutions through initiatives like the Productivity Solutions Grant and the SMEs Go Digital.
50. Beyond a certain stage, enterprises will need AI solutions, which are tailored to their needs and integrated into their business processes and systems. To support this, I will set aside up to $150 million for a new Enterprise Compute Initiative. Under this initiative, eligible enterprises will be partnered with major cloud service providers to access AI tools and computing power, as well as expert consultancy services. This will help enterprises leverage AI more effectively in their transformation journey.
51. Companies also need capital to execute their growth plans.
1. a. We now have a more vibrant financing ecosystem, backed by a growing network of angel investors, venture capitalists, and private equity firms.
2. b. This is complemented by Government investment funds which invest in promising companies alongside commercial partners like 65 Equity Partners and Heliconia Capital.
3. c. Over the past five years, we have set aside over $1.8 billion to support enterprise growth through investment funds. Like other private equity funds, our investments generally span a 3- to 7-year horizon. To help enterprises with longer growth trajectories, we will deploy some of our funds as patient capital, with longer investment horizons, to ensure that promising companies have the resources they need to thrive.
52. Globally, we have seen the emergence of a private credit market which offers innovative financing solutions to enterprises.
1. a. But few of these private credit funds focus on Asia, much less Singapore-based enterprises.
2. b. So we will introduce a new $1 billion Private Credit Growth Fund.
3. c. This will provide more financing options for high-growth local enterprises. And the Minister for Trade and Industry will share more at the Committee of Supply.
53. As enterprises scale up, they may also list on a stock exchange to access more capital. Larger companies with significant overseas revenues will typically choose to list abroad to be closer to their main consumer markets. We recognise and accept these as commercial decisions. But there has been feedback that the Singapore Stock Exchange is not attractive, even for companies that are focused mainly on Singapore and Southeast Asia.
54. And that is why we set up the Equities Market Review Group, chaired by Minister Chee Hong Tat, to strengthen the attractiveness of our stock market to such listings and investments.
1. a. The Review Group has developed its first set of measures. They include several tax-related recommendations which have been submitted to MOF, just in time for the Budget.
2. b. I accept their recommendations and will introduce tax incentives for Singapore-based companies and fund managers that choose to list in Singapore and grow their economic activities here. I will also introduce a tax incentive for fund managers which invest substantially in Singapore-listed equities, to encourage more investment in our capital markets.
3. c. The Review Group will share more details on its measures in the coming days.

Tackling Infrastructure and Resource Constraints

55. Third, to unlock our growth potential, we must invest in world-class infrastructure and find innovative ways to overcome our resource constraints.
56. Singapore thrives as a hub economy, facilitating the flow of people, capital, goods, and ideas. To sustain this position, we must ensure excellent connectivity with the rest of the world, both physically and digitally.
1. a. Development on the Tuas Port is progressing well, and Singapore recorded new highs last year in vessel arrival tonnage, container throughput and bunker sales. This reinforces our role as a leading maritime hub.
2. b. We have achieved islandwide 5G coverage, and we are upgrading our Nationwide Broadband Network to deliver speeds up to 10 times faster. This will enhance digital connectivity for businesses and individuals.
57. Our air hub is another key pillar of connectivity. We will break ground for Changi Airport Terminal 5 in the coming months. When completed, Terminal 5 will expand our airport’s capacity by more than 50%, and will ensure that Singapore remains a critical gateway for global travel and trade.
1. a. To ensure sufficient resources to develop our air hub, I will top up the Changi Airport Development Fund by $5 billion.
2. b. With the President’s concurrence, the Government will also provide a guarantee to Changi Airport Group. This will help to lower the cost of borrowings needed to develop Terminal 5 and supporting infrastructure in Changi East.
58. Besides infrastructure, we also need better solutions to address our resource constraints, and enhance our economic resilience.
1. a. A generation ago, our critical constraint was water.
2. b. We tackled this head-on, developed NEWater and built our water industry.
3. c. Today, we face a different challenge. The industries of the future – artificial intelligence, semiconductors, biopharmaceuticals – are highly energy-intensive.
4. d. To meet these growing energy needs and to bring down our carbon emissions at the same time, we will need more clean power.
5. e. Expanding access to clean energy is therefore a major national imperative.
59. One immediate solution is to import low-carbon electricity from the region.
1. a. We are making progress on such electricity imports. We’ve started a pilot with Peninsular Malaysia, and expanded the capacity of a power trading initiative with Laos, Thailand and Malaysia.
2. b. By 2035, we expect that about one-third of our projected electricity demand can be met through electricity imports.
60. But beyond imports, we also need to have our own domestic sources of clean power to ensure greater energy resilience.
1. a. Our options are inherently limited, because we do not have the natural resources nor the land to meet our needs using hydro, wind, or solar power.
2. b. We have been closely evaluating the use of low-carbon hydrogen for power generation.
3. c. But there are inherent challenges in the production, storage and transportation of hydrogen, which make it hard to scale up in a commercially viable manner.
61. One established low-carbon energy source that is used globally is nuclear power.
1. a. We had considered the possibility of using nuclear power back in 2010.
2. b. We assessed then that conventional nuclear technologies were not suitable for Singapore.
3. c. But we continued to keep a close eye on nuclear energy developments, and progressively built capabilities in nuclear safety over the past decade to keep our options open.
4. d. Since then, we have seen significant advancements in nuclear technologies.
5. e. One such development is that of small modular reactors (or SMRs), which have better safety features than conventional reactors. Presently, only a few SMRs have been deployed around the world, but many more could become operational by the end of this decade.
6. f. Interest in nuclear energy is also increasing worldwide. In our region, several countries are planning to include nuclear in their energy mix. Malaysia and Indonesia also have experience in nuclear technologies and have operated research reactors for some time.
62. We will therefore study the potential deployment of nuclear energy in Singapore. We will take further steps to systematically build up our capabilities in this area.
1. a. We have signed agreements with the US on civil nuclear cooperation.
2. b. We are also working on similar cooperation with other countries, which have capabilities and experience in civilian nuclear power, especially SMRs.
3. c. Within the Government, we will reorganise ourselves to provide greater emphasis on this work. We will need new capabilities to evaluate options, and to consider if there is a solution that Singapore can deploy in a safe and cost-effective way.
4. d. And these capabilities will also be needed for nuclear safety, which will become more salient given the growing regional interest in nuclear power.
63. Be it electricity imports, hydrogen or nuclear, we will need to make major investments in new infrastructure.
1. a. And that’s why we established the Future Energy Fund last year.
2. b. I will top up the Fund by $5 billion.
3. c. This will further support our critical undertaking to secure clean power for Singapore.
64. Our efforts to enhance our technology and innovation engines, strengthen our enterprise ecosystem, invest in new infrastructure and overcome our resource constraints, will enable us to refresh our value proposition and stay ahead in a rapidly changing world.
65. Over the decades, we can see how Singapore’s economic success has translated to tangible improvements in our lives.
1. a. In the past, tertiary graduates had fewer job options to choose from, with career paths revolving around a few traditional areas.
2. b. These days, the job landscape is far more diverse.
3. c. Those with an interest in science and engineering can pursue opportunities in advanced manufacturing, IT, biomedical science and sustainability, amongst others. Those with strengths in creativity and people-oriented roles can explore careers in the creative industry, lifestyle and hospitality sectors, as well as sports and fitness.
4. d. Our thriving care economy also offers a wider range of opportunities, including in early childhood education, healthcare and elder care.
66. This is what economic dynamism and growth can deliver for our people. And so we will keep our economy strong and vibrant, and ensure that there are even more opportunities and good jobs for all Singaporeans – both now and in the future.

C. Advancing Our Growth Frontier

C. Advancing Our Growth Frontier

Enhancing our Technology and Innovation Engines

Strengthening our Enterprise Ecosystem

Tackling Infrastructure and Resource Constraints

ANNEXES