Overview of the 2025 Budget
On February 18, Prime Minister and Minister for Finance Lawrence Wong delivered the Government’s 2025 Budget to Parliament. In his speech, the Prime Minister emphasized Singapore’s resilience as it celebrates its 60th year of independence. He also acknowledged the need to secure Singapore’s future amidst rising trade barriers, global uncertainty, and downside risks from tensions between the United States and China.
Under the theme “Onward Together for a Better Tomorrow”, the Budget 2025 aims to advance the national Forward SG agenda through the following key strategies:
Tackling Cost Pressures: The Government is introducing financial support for households, children, and vulnerable groups and providing tax relief and wage support for businesses to ease rising costs.
Advancing Our Growth Frontier: Singapore is enhancing its economic competitiveness by driving technological innovation, strengthening its enterprise ecosystem, and investing in infrastructure while addressing resource constraints.
Equipping Workers Throughout Life: The government is promoting lifelong learning, supporting enterprise workforce transformation, and enhancing career services for workers.
Building a Sustainable City: Through targeted investments and initiatives, Singapore is advancing sustainability by partnering globally to cut emissions, greening transport, strengthening climate resilience, and promoting eco-friendly lifestyles.
Nurturing a Caring and Inclusive Society: Singapore is strengthening support for vulnerable families, enhancing benefits for large families, enabling seniors to age well, and expanding opportunities for persons with disabilities.
Rallying as One United People: Singapore is celebrating its people’s contributions with SG60 rewards, tax rebates, and cultural initiatives while strengthening community bonds.
Fiscal Position: The Government is committed to building a fairer and more resilient tax system to maintain its surplus.
The estimated FY2025 Total Expenditure is projected at S$123.8 billion, an increase of S$10.9 billion (9.6%) from the previous fiscal year. With global economic headwinds, Singapore anticipates moderate growth of 1% to 3% in 2025.
Private Sector Highlights
On Taxation and Market Competitiveness
Corporate Tax: Eligible firms can receive a 50% corporate income tax rebate for the 2025 assessment year.
BEPS 2.0: Singapore is committed to implementing the Base Erosion and Profit Shifting (BEPS) 2.0 framework starting in January 2025, where multinational enterprises (MNEs) are subject to a minimum 15% effective tax rate.
PM Wong also acknowledged the evolving global tax dynamics and geopolitical shifts, such as the withdrawal of the new US administration from the earlier forged consensus by the OECD. He added that the Government is carefully considering additional incentives to maintain its attractiveness for foreign investments.
SGX: Following private sector feedback, the Government tasked the Equities Market Review Group with strengthening the competitiveness of Singapore’s financial ecosystem to support the sustainable growth of its equities market. A comprehensive set of measuresmeant to strengthen Singapore’s equities market, including improving the attractiveness of the Singapore Stock Exchange (SGX), was then submitted by the review group last February 21.
On Industries of the Future
With the Government recognizing that innovation and technological progress are drivers of growth, Budget 2025 identifies three pivotal sectors, which will drive Singapore’s long-term economic growth. The Government is expected to support research & development and training in the areas of artificial intelligence, semiconductors, and biopharmaceuticals. Singapore aims to encourage MNEs to expand high-value operations and investments by leveraging support measures.
For AI: To position Singapore as a global leader, the government will allocate up to S$150 million for the new Enterprise Compute Initiative focusing to accelerate on AI development and deployment. This initiative will enable eligible enterprises to collaborate with major cloud service providers, gaining access to AI tools and computing power.
For Semiconductors and Biopharmaceuticals: The government has allocated approximately S$1 billion to enhance R&D infrastructure, focusing on semiconductor and biopharmaceutical sectors. This funding will include the establishment of the National Semiconductor R&D Fabrication Facility, providing industry-grade tools for research institutions and industry partners to enhance Singapore’s semiconductor technology capabilities. Additionally, the government will allocate a S$3 billion top-up to the National Productivity Fund in the biopharmaceutical sector to support Singapore’s competitiveness in innovative healthcare solutions and biotech advancement.
On Connectivity and Sustainability
Infrastructure: To sustain Singapore’s position as a regional hub, the Government committed to ensuring its physical and digital connectivity to the rest of the world. Budget 2025 allocates funding for key infrastructure initiatives, including (i) the ongoing expansion of nationwide broadband and 5G networks, (ii) enhancements to Changi Airport, and (iii) incentives to promote green transportation.
Energy: As Singapore advances its agenda for the future, energy diversification will remain a central strategy. Expanding access to clean energy will be a national imperative. Singapore has initiated the Lao PDR-Thailand-Malaysia-Singapore Power Grid Project in 2021, targeting the import of up to 100 megawatts of renewable energy – a supply estimated to meet one-third of Singapore’s electrical demand. Budget 2025 includes a top up of S$5 billion to the Future Energy Fund, established in 2024, to support infrastructure investments vital for the nation’s transition towards a decarbonized future. Furthermore, the Government will therefore study the potential deployment of nuclear energy in Singapore.
Implications and Opportunities
On GE2025: Singapore's 2025 Budget introduces substantial financial support measures aimed at addressing rising living costs and economic challenges. These initiatives are widely viewed as efforts to bolster public sentiment ahead of the General Election, which must occur by November 2025. Political analysts describe this budget as more generous than previous election-year budgets, e.g., in 2015 and 2020. The enhanced benefits are seen as a strategy to create a "feel-good" factor among voters, addressing immediate concerns like inflation and the cost of living.
On Attracting Investments: Singapore’s Budget 2025 reinforces its priority to remain a choice hub through creating more opportunities for US companies in AI, semiconductors, and biopharmaceuticals in the areas of research collaborations, market expansion, and technology commercialization. US firms in renewable energy and nuclear technologies can engage in funded projects and feasibility studies (see 123 Agreement) while financial institutions can leverage tax incentives to expand their portfolios. Singapore’s focus on sustainability means greater market opportunity for US companies with strong environmental, social, and governance (ESG) practices. Similarly, new entrants can leverage on Singapore’s initiatives (e.g., Global Founder Program) that encourage global founders to anchor and grow new ventures in the city state.
On ASEAN: Singapore’s Budget 2025 demonstrates its long-term ambitions in ASEAN, to continually establish its role as a driver of regional economic growth, innovation, and sustainability. Singapore’s investments in empowering businesses will strengthen ASEAN’s position in high-tech industries, fostering opportunities for cross-border R&D collaboration, and supply chain integration. Enhanced connectivity through digital infrastructure, Changi Airport expansion, and regional power grid initiatives will improve trade and energy security across ASEAN. Overall, Singapore’s focus on technological advancement, investment attraction, and regional connectivity could create ripple effects that enhance ASEAN’s economic resilience and integration.
