Singapore’s Budget 2025

A future-ready workforce, a competitive economy, a thriving business hub with abundant opportunities, and an inclusive society where Singaporeans from all walks of life thrive—these key themes encapsulated the expansionary budget presented by Singapore’s Prime Minister and Minister for Finance, Lawrence Wong, on February 18, 2025.

This year’s budget holds particular significance, as Singapore marks its 60th anniversary of independence, with a general election on the horizon in the coming months. In his first budget since becoming Singapore’s Prime Minister and the last before the general election, PM Wong addressed key issues facing citizens of all ages, supported diverse communities, and aimed to boost Singapore’s economic competitive edge amid global uncertainties, including trade conflicts and geopolitical tensions.

Macroeconomic climate

Singapore’s economy remains resilient but faces headwinds from global trade uncertainties, technological disruptions, and shifting supply chains. The government is expecting a moderate outlook for growth, with GDP growth projected at 1 to 3 per cent, while inflation is expected to average 1.5 per cent to 2.5 per cent.

The key thrusts of Budget 2025 largely align with previous expectations and forecasts, suggesting that it will focus on addressing the immediate challenges faced by Singaporeans while enhancing Singapore’s long-term competitive edge and economic sustainability. Singapore’s strong focus on prudent public finances has provided the flexibility to adopt an expansionary stance in Budget 2025. PM Wong expects to end FY2024 with a surplus of S$6.4 billion (US$4.7 billion), or 0.9 per cent of gross domestic product (GDP), with expectations of another surplus, amounting to S$6.8 billion (US$5.07 billion), in FY2025.

Key Takeaways:

In an election year, the budget offers many “goodies” to Singaporeans. S$143.1 billion (US$106.8 billion) has been announced for targeted measures for families, children, seniors, and the special needs community. Singaporeans will also benefit from a SG60 package, celebrating Singapore’s 60 years of independence, made up of cash vouchers and income tax rebates in a bid to address growing concerns over rising costs of living and inflation. As PM Wong said in his speech, this is a “budget for all Singaporeans”.

• Cost pressures are likely to be a critical issue in the upcoming general election. These “goodies” are likely to head off any opposition and public sentiments around rising costs and high inflation.

Notably, this budget is one of the most significant in recent years, focusing on bolstering Singaporean businesses and solidifying the nation’s position as the region’s leading business hub. It demonstrates the resolve of Singapore’s fourth-generation leadership to build on existing policies, strengthening the nation’s competitive edge by cultivating a skilled workforce and enhancing infrastructure, all while navigating an increasingly volatile global landscape marked by geopolitical uncertainties and economic challenges.

Singapore’s latest investment announcements in key sectors, including medtech, biosciences, semiconductors, technology, and clean energy, will create abundant opportunities for both existing businesses and those seeking to enter these industries. Businesses can also look forward to tax rebates and grants available to defray costs and enhance capabilities. Key announcements include:

• PM Wong announced S$1 billion (US$745 million) to refresh biosciences and medtech infrastructure and build a new national semiconductor R&D facility. This will provide state-of-the-art facilities, promote collaboration within the research community and enable faster translation of research into commercial solutions. Companies that undertake R&D and innovation in partnership with other stakeholders will also get support.
• A 50% corporate income tax rebate for the 2025 year of assessment was announced. Companies that employed at least one local employee in 2024 will get a minimal tax benefit of S$2,000 (US$1,500). The total benefit for each company will be capped at S$40,000 (US$29,800). Further tax incentives were also announced for Singapore-based companies and fund managers that list in Singapore, as well as for fund managers that invest in Singapore-listed companies.
• The Economic Development Board will launch a Global Founder Programme to encourage multinational firms and entrepreneurs to anchor and grow more new ventures in Singapore. To help enterprises with longer growth trajectories, the Government will deploy some of its funds as patient capital, with longer investment horizons to ensure promising firms have the resources they need to thrive.
• S$150 million (US$111.9 million) for a new Enterprise Compute Initiative to help firms tailor AI solutions to their needs and integrate them into their business processes and systems. A new S$1 billion (US$745 million) Private Credit Growth Fund to provide more financing options for high-growth local enterprises.

Singapore’s S$5 billion (US$3.7 billion) top-up to the Changi Airport Development Fund will enhance global connectivity, reinforcing its position as a key gateway to Asia and ensuring businesses have fast access to other major business hubs. These new incentives, combined with Singapore’s strategic location in Asia, offer immense potential for businesses to grow and connect with the broader ecosystem across the region and beyond.

In support of Singapore’s goals to expand access to clean energy, investments in developing new infrastructure were announced, intensifying efforts to adopt clean energy in the city-state. The government will add S$5 billion (US$3.7 billion) to its Future Energy Fund, launched in 2024, to support infrastructure investments for Singapore’s energy transition towards net-zero by 2050. The government will also proactively study the potential deployment of nuclear power, highlighting a willingness to explore alternative energy options and signaling the potential for growth in a new energy sector. Singapore has already signed agreements with the United States on civil nuclear cooperation, and others are in the pipeline with countries with similar capabilities.

The government continues to emphasise talent development as a cornerstone of economic strategy. To meet the growing demands of high-skilled labour and to develop a future-ready workforce, a S$3 billion (US$2.4 billion) top-up to the National Productivity Fund was announced to support businesses in educating and training workers. In addition, a new SkillsFuture Workforce Development Grant will be introduced, which will provide higher funding support of up to 70 per cent for job redesign activities, and an additional S$200 million (US$149 million) will be pumped into National Trades Union Congress (NTUC) Company Training Committee grant to help more companies transform. Companies in high-value industries such as advanced manufacturing, technology, financial services stand to gain the most from these initiatives.

Looking forward

As the Prime Minister mentioned in his speech, we are facing a new global challenge with economic and trade barriers. However, despite these challenges and shifts in the global landscape, Singapore offers promising opportunities and political stability, ensuring policies announced are likely to be implemented, providing businesses with a predictable and secure environment to operate in. In the upcoming general election, the People’s Action Party, led by PM Wong, is expected to remain in power, although there is growing support among Singaporeans for more diverse voices in parliament.

Singapore’s strong infrastructure and regional connectivity further enhance its appeal, offering businesses valuable advantages. Moreover, significant investments in industries such as science, technology, and energy create exciting opportunities for companies looking to expand in Asia and lead the charge in innovation and change.

For more information or if you any questions, please reach out to Shruti Gakhar, Regional Director, Asia-Pacific on shruti.gakhar@speyside-group.com.