Treading a Delicate Tightrope: Singapore’s Economic Strategy in an AI Era

By Nicolette Chua

Singapore has long built its economic strategy around a clear understanding of scale. As a small, trade-dependent economy, Singapore’s competitive advantage lies in planning ahead, building high-trust institutions and creating a conducive economic climate where both businesses and human capital can flourish.

The advent of Artificial Intelligence (AI) is now testing Singapore’s longer-term economic strategy. Just in the past few years, the rapid pace the AI development has resulted in higher productivity, new business models and better public services. However, it has also raised difficult questions about the trade-offs with jobs, skills, security and accountability. In its recent Economic Strategy Review (ESR), AI has been identified as a core pillar of national economic strategy. The review is timely – it calls for Singapore to become a trusted hub for developing, testing and deploying AI solutions, while helping businesses adopt the technology and workers adapt to changing roles. This places AI at the heart of Singapore’s next phase of economic transformation, as it aims to sustain growth in a more uncertain global environment while substantially investing in workers, digital infrastructure and safeguards – an approach that treads a delicate tightrope.

AI Adoption by Enterprises and Workers

In a recent SG Digital Economy Report 2026 by the Infocomm Development Authority of Singapore (IMDA), it found that Singapore’s digital economy reached S$144.1 billion in 2025, accounting for 19.3% of gross domestic product. AI adoption among enterprises rose from 14.7% in 2024 to 23.5% in 2025. Among companies using AI, 87.6% cited productivity and process improvements, while 44% reported lower costs or better use of resources. The report highlighted that most AI adopters use commercial AI tools, while fewer customise systems or develop AI agents. The larger opportunity depends on whether companies can integrate these tools into workflows and move useful applications from pilots into daily operations.

Singapore recognises that technology adoption alone will not secure sustainable economic growth. AI has already rapidly displaced several white-collar roles, especially those involving routine tasks. It has thus committed to investing heavily in its domestic workforce. Just last month, the government announced that it will introduce more than 200 AI courses, enabling Singaporeans to learn basic workplace applications, productivity tools and advanced capabilities for AI-enabled roles. Singapore has also set up a new AI centre to provide learning, career guidance and employment support, while an AI readiness assessment was launched to help individuals identify suitable training. Further programmes aim to train 100,000 non-technology professionals in domain-specific AI skills by 2029 and to upskill 40,000 technology professionals over three years.

Investments and Infrastructure for an AI Economy

Major companies across a myriad of sectors have established or expanded operations in Singapore, including technology firms Google, Microsoft, OpenAI and Databricks, insurer Prudential and mining company BHP. Their AI laboratories, research facilities and centres of excellence are a testament to Singapore’s role as a hub for enterprise AI adoption and talent development. This dovetails with Singapore’s efforts to help its workforce become AI-ready as companies seek the best talent for the jobs they create.

Beyond investments, physical infrastructure is increasingly becoming the “currency” of AI: access to computing capacity, reliable power and connectivity determines how effectively economies can develop and deploy AI. Singapore already hosts more than one gigawatt of data centre capacity, yet land, electricity and water remain key resource constraints. Singapore has set its ambitions to maximise the economic value generated by computing infrastructure rather than pursue capacity for its own sake.

To this end, the government has passed the Digital Infrastructure Bill to support Singapore’s longer-term goal of creating value from its limited infrastructure capacity while regulating its growth. The law establishes two licensing regimes to strengthen the security and resilience of major cloud services and data centres, and the environmental sustainability of data centre operations. The framework supports Singapore’s aim of generating greater value from its limited infrastructure capacity.

Additionally, as demand for AI computing grows, Singapore’s strategy entails positioning itself as a trusted regional anchor connecting the physical infrastructure with capital, expertise and businesses. While other markets can provide energy and land, Singapore can contribute in providing advanced, value-added services in this area.

Safeguards alongside adoption

As with AI’s economic benefits, it also entails costs. Some roles will be displaced, while many more will be reconfigured. The IMDA report noted that while 68% of workers recognised their need for AI upskilling or reskilling, only 37% had attended relevant training during the preceding year. Even with AI training, Singapore is cognisant that human judgement and oversight remain vital. AI overuse may weaken foundational skills and lead to cognitive decline if workers routinely delegate tasks without deeply understanding them. Employees need to verify outputs, protect confidential information, recognise unreliable results and know when human expertise must take precedence, especially as AI systems gain autonomy and enter higher-stakes settings.

At the macro level, AI can result in serious harms such as data privacy violations, inaccurate outputs, model bias and opaque decision-making. Singapore’s approach is to pair AI adoption with appropriate safeguards to mitigate these harms. Domestically, this multi-layered approach includes stronger cyber defences, limits on AI actions, human oversight, continuous testing and the use of AI to detect vulnerabilities. Singapore also combines broad safeguards with sector-specific governance. For example, the Monetary Authority of Singapore has just announced proposed AI risk management guidelines for all financial institutions. These cover supervisory expectations on human board and senior management oversight, AI inventories and materiality assessments among other safeguards. At the international level, it has recently proposed exploring a United Nations framework convention on AI safeguards, supported by common testing methods, incident reporting and mechanisms that preserve human control and accountability.

It remains to be seen whether Singapore will establish legislation governing AI, as with other jurisdictions such as the European Union as well as Asia counterparts such as South Korea and Vietnam. However, the sector-specific approach reflects the needs of a financial centre where trust is an economic asset. Firms need room to innovate, but customers and markets also need confidence that automated systems remain controlled, explainable and accountable.

Preparing for an AI-enabled world

As the world heralds in a new era of AI, there is unlikely to be a future in which workers and economies can simply opt out. The practical question is whether they enter that future with the skills, infrastructure and safeguards required to use AI well – a difficult line to tread.

Singapore is choosing to embrace AI within reasonable limits by incorporating and adapting it into its economic strategy playbook. This comes in the form of investing in workers, attracting high-value investments, strengthening digital infrastructure and developing credible safeguards. As a price taker in global technology, its success will depend on keeping these elements aligned as the technology advances.

References

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