A future-first budget: invest, scale, compete

EVEN with Singapore’s stronger than expected 5 per cent growth in 2025 – the first full year of Prime Minister Lawrence Wong’s current term – Budget 2026 leaves no room for complacency. Amid increasing technological acceleration, geopolitical fragmentation and shifting capital flows, growth is projected to ease to 2 to 4 per cent in 2026.Budget 2026 sends a clear and strong signal of the government’s focus on a strategic and targeted action plan to achieve long-term competitive advantage.Marking a departure from the traditional focus on large, established players and early stage startups, the government announced a S$1 billion enhancement to the Startup SG Equity scheme. This private capital co-invest scheme, which previously sought to catalyse early stage innovation, will now extend support to growth-stage companies, helping them scale internationally.We applaud this approach to engage firms earlier in their growth cycle, signalling the country’s long-term commitment to nurturing the next generation of economic champions even if the gestation period may be longer.Internationalisation as a strategic imperativeEven as Singapore widens its inbound aperture to attract a broader pool of high-growth firms, the outbound strategy to help local enterprises scale internationally must remain equally sharp. Budget 2026 reinforces this dual-pronged playbook by deepening support for internationalisation and accelerating workforce upgrading.Recognising that bolder internationalisation is central to Singapore’s next phase of relevance and resilience, support levels for internationalisation grant schemes will be enhanced to up to 70 per cent for small and medium enterprises (SMEs), and up to 50 per cent for non-SMEs.The Market Readiness Assistance grant – which defray costs of overseas expansion, such as market promotion, business development and set-up – will also be enhanced. Support will rise to up to 70 per cent (from up to 50 per cent previously), between Apr 1, 2026 and Mar 31, 2029. While this is a generous uplift, the S$100,000 cap per company per market remains unchanged. The encouraging news is that this cap, previously applicable until Mar 31, 2026, will also be extended – providing firms with continued runway to deepen overseas efforts.Whether the cap – which increased four times from S$20,000 to S$100,000 in 2020 – will shift again before its sunset date remains a key development to watch.Starting the second half of 2026, the enhanced grant will support enterprises to deepen activity in existing overseas markets, and not just break into new ones, acknowledging that overseas connections take time to bear fruit. Enhancements to the Double Tax Deduction for Internationalisation (DTDI) further sweetens internationalisation efforts. While the scheme was extended in the previous Budget to Dec 31, 2030, the 200 per cent deduction cap is now set to more than double – from S$150,000 to S$400,000 per tax year. This sizeable increase should provide a stronger impetus for companies to commit to deeper, more sustained market development rather than one-off exploratory efforts. The breadth of the qualifying activities under the DTDI scheme will also be widened, notably to cover investment feasibility and due diligence studies, master licensing and franchising, to name a few. This reflects the government’s agility in adapting to changing market needs of companies, similar to how e-commerce-related qualifying expenditure was included back in 2023. At the same time, higher loan ceilings under the Enterprise Financing Scheme give firms the financial headroom to undertake more capital intensive, higher-risk overseas ventures. Future-proofing the workforce Findings from EY’s 2025 Work Reimagined Survey show that 89 per cent of employees in Singapore already use artificial intelligence, yet only 7 per cent deploy it in advanced, transformative ways. Just 5 per cent report receiving sufficient training, indicating a significant capability gap that must be addressed for AI-enabled productivity gains to be realised.With automation and AI reshaping industries faster than organisations can redesign roles, Singapore is moving decisively to stay ahead. A new National AI Council will be established, alongside a suite of National AI Missions to accelerate adoption and build strategic capabilities. That PM Wong will personally chair this council elevates AI to a national strategic priority.Singapore’s competitiveness hinges on how quickly enterprises can harness AI at scale – confidently and responsibly – and how workers can upskill and transition to higher-value activities in an AI-enabled economy.The S$400 million Enterprise Workforce Transformation Package, announced in the previous Budget and slated to roll out from 2026, demonstrates Singapore’s intent to future-proof its workforce through structured upskilling and industry-relevant capability-building. The latest announcement to strengthen AI literacy across all institutes of higher learning builds on this foundation.Together, these initiatives form a coherent national strategy: equipping today’s workers and tomorrow’s graduates to navigate intelligent ecosystems. This integrated approach is crucial as Singapore faces an ageing, multi-generational workforce.Ultimately, this alignment between investment ambition and workforce transformation ensures that as Singapore courts the next generation of global companies, it also equips its own enterprises and workers to compete confidently in a higher-value, skills-based terrain. A new compact for growthSingapore’s transformation story has always been anchored in pragmatism, openness and long-term planning. These qualities thread through Budget 2026 – but with greater urgency and decisiveness.The country must be bolder, faster and more intentional in its pursuit of transformational growth. The looming question is whether businesses and workers can tap the measures swiftly enough, with the willingness and hunger to transform, and move in tandem to the urgent beat this moment demands.Both writers are from Ernst & Young Solutions. Amy Ang is Singapore head of tax and Sandie Wun is partner, international tax and transaction servicesThis article presents the writers’ own views. It does not necessarily reflect the views of the global EY organisation or its member firmsFor more of BT’s Budget 2026 coverage, go to bt.sg/budget26