By Medinex Team  |  Feb 2025

In his Budget 2025 speech delivered on 18^th February, Prime Minister Lawrence Wong laid out a series of transformative measures that aim to support Singaporeans and businesses in the face of rising living costs, global economic volatility, and the need for sustainable growth. As Singapore navigates uncertain global waters, the government’s primary focus in this budget is to address the economic pressures faced by its citizens, foster a resilient economy, and ensure long-term prosperity.

A Snapshot of Singapore’s Economic Outlook

The global economic environment is fraught with challenges, and Prime Minister Wong highlighted the significant uncertainties stemming from the ongoing competition between major world powers like the United States and China. These geopolitical tensions are reshaping the global economy, and as a small, open economy, Singapore is feeling the effects. The city-state’s GDP growth of 4.4% in 2024 was a robust result; however, the government projects a more modest GDP growth range of 1.0% to 3.0% for 2025.

Despite these challenges, Prime Minister Wong emphasized that Singapore’s fundamentals remain strong, and the budget would be designed to shield the country’s economic resilience while positioning it to thrive in the post-pandemic global economy. The vision articulated for 2025 is one that strives for economic competitiveness, innovation, and social equity.

Boosting Businesses and Strengthening Economic Competitiveness

In addition to providing relief to individuals and families, Budget 2025 addresses the challenges faced by businesses. With the global economy in flux, businesses must remain competitive to navigate uncertainties and thrive in a digital-first world. To support Singapore’s business ecosystem, the government has introduced measures to stimulate growth and enhance productivity.

Corporate Income Tax Rebate

To ease the financial burden on businesses, particularly small and medium enterprises (SMEs), the government has introduced a corporate income tax rebate for the year of assessment 2025. Companies that meet the eligibility criteria, including hiring at least one local employee in the previous year, will receive a 50% tax rebate, with a minimum rebate of S$2,000 and a cap of S$40,000. This measure is designed to help businesses retain employees and improve their financial stability.

Wage Growth Co-Funding

The government is also enhancing the co-funding scheme for businesses that raise wages for lower-wage workers. This move is in line with Singapore’s broader goal of improving wage growth and productivity, especially for lower-income earners. The increased co-funding levels will allow businesses to reward their workers with higher wages without incurring undue financial strain.

Support for Innovation: AI Adoption and Industry Transformation

Looking forward, Singapore’s budget focuses heavily on the need for businesses to embrace innovation and digital transformation. Prime Minister Wong emphasized the importance of Artificial Intelligence (AI) in driving future economic growth and enhancing productivity across sectors. The government will invest in initiatives that support the adoption of AI technologies, enabling businesses to leverage them for greater efficiency and competitiveness.

Sustainability and Green Economy: A Long-Term Vision

Budget 2025 also outlines Singapore’s commitment to sustainability and environmental stewardship. With global climate change issues becoming increasingly urgent, Singapore is positioning itself as a leader in sustainable development and green technologies.

Green Finance and Renewable Energy

To support the country’s green transition, the government is investing in green finance initiatives and renewable energy projects. These initiatives aim to reduce the country’s carbon footprint while creating new economic opportunities in clean energy and sustainable industries.

Preparing for a Sustainable and Resilient Future

Prime Minister Wong closed his Budget 2025 speech with a message of optimism and resilience. He reaffirmed the government’s commitment to building a fairer, more inclusive society that can weather global challenges while embracing new opportunities for growth and innovation.

As Singapore faces a year of projected slow growth and global uncertainties, Budget 2025 provides a robust and comprehensive roadmap that focuses on both short-term relief and long-term economic sustainability. By investing in individuals, businesses, and industries, Singapore is positioning itself for a prosperous future that is resilient to both external pressures and internal challenges.

This balanced approach will ensure that Singapore remains a thriving global hub while addressing the needs of its citizens and businesses, creating a brighter and more secure future for all.