Budget 2026: 57% of firms demand AI grants to offset rising costs

Nearly 60% of companies are calling for a significant injection of capital into digital adoption and skills credit programmes.

Businesses want more budget allocation for financial support to boost their efforts in digital adoption and skills upgrading, according to UOB Business Outlook Study 2026.

In its latest analysis, 57% of Singapore businesses said there is a need for grants and extra funding for digital adoption, and 55% said the government should inject more capital into the SkillsFuture credit.

Businesses specifically said that funding for digital adoption in manufacturing, engineering, and industrials, and medium-sized enterprises, should be increased.

“Manufacturing, engineering and industrials sectors face a bigger challenge with rising operational costs and are looking for budget initiatives that lessen their cost burden,” the report read.

For the SkillsFututure, additional funding should focus on health, community and personal services, and consumer goods and wholesale trade.

Prime Minister Lawrence Wong is set to deliver the Budget speech in Parliament on 12 February. Various expectations have been laid out, with some expecting increased funding for technology to fuel Singapore’s next phase of economic growth.

The UOB analysis said that other areas that need additional funding are incentives to adopt sustainable practices, support for overseas expansion, and support for working capital needs.

When it comes to sustainable practices, more funding should be allocated to health and medium enterprises.

In a separate report, Chua Han Teng, senior economist at DBS Group Research said that Singapore is seen to accelerate the adoption of artificial intelligence (AI) and transformation. The city-state currently has over 60 AI Centres of Excellence set up by leading corporations, citing data from the Ministry of Digital Development and Information.

“Proposals to enhance the Enterprise Compute Initiative (ECI), led by Digital Industry Singapore, will potentially be considered in this year’s budget. These include providing tiered support that offers differentiated access and deployment of AI tools to companies with higher funding,” the expert noted.

Deloitte has recommended targeted support under the 2026 spending plan to build AI readiness, including a dedicated fund for medium-sized enterprises.