State support key to ramping up digitalisation of Singaporean businesses: KPMG
High cost, lengthy processes and market uncertainties are among top barriers.
Many Singaporean businesses are lagging in digitalisation and the government may need to step up in helping enterprises of all sizes to catch up, according to KPMG in Singapore’s SG Budget 2024 Insights.
While the city-state has established itself as a regional technology hub, Lyon Poh, partner in technology consulting at KPMG in Singapore, said many businesses could not afford to experiment with new technologies like AI due to high costs and the lack of proper government support.
“For Singapore to be a leader in digitalisation, our businesses must fully embrace digital transformation and put innovation at the front and centre of their strategy,” Poh said. “This is not about productivity; it is about survival.”
Surveys showed that 63% of businesses in the city-state are reluctant to invest in AI due to hefty upfront costs and licensing to gain access to these technologies, said Catherine Light, partner in Tax Reimagined for KPMG in Singapore. She also noted that the time investment and effort in training AI and machine learning models as other factors.
While larger businesses have access to global technologies and teams, she said small businesses depend heavily on limited local capabilities.
Light said the AI and data analytics grants from the government are mainly geared toward small end-of-town financial services sector instead of a broad-based approach, limiting the benefits to global organisations.
She suggested the government provide grant schemes based on all enterprises while also creating platforms specifically catering to small and medium enterprises (SMEs).
On its existing grant scheme operating on a reimbursement basis, KPMG suggested that this be changed to something akin to a co-investment where the state’s support goes directly to the service provider.
This will allow SMEs to adopt these technologies seamlessly without the debilitating upfront costs, she said.
To solidify the country’s tech hub reputation, both agreed that scalability is key, with Poh stating that “most businesses in Singapore probably do not have the appetite and the resources to create from nothing to something.” They called this a ‘zero to one’ goal.
He said the state should focus its resources on expanding innovation with the potential to grow from ‘ten to a hundred.’ He said cross-government arrangements and industry collaboration frameworks could help scale up these initiatives.
For Light, she said: “This does not require only a single country view. It definitely requires a global and regional view to how do we get to where we need to go using all of the resources at our disposal.”