BUDGET 2025: Tech industry flags practical challenges of digital adoption

There is a need to close the digital skills gap amongst SMEs.

Whilst Budget 2025 has been praised for its focus on supporting small and medium enterprises (SMEs) through digital transformation and other measures, some voices in the tech industry have raised concerns about the practical challenges SMEs may face in adopting and making full use of the initiatives outlined.

Koren Wines, Managing Director of Xero Asia, noted that many small businesses lack the technical knowledge and skills to fully leverage AI and data technologies, particularly in areas such as financial management. She highlighted that whilst the government’s financial schemes, including the National Productivity Fund, aim to help businesses build digital capabilities, success will depend on SMEs’ ability to effectively integrate these tools.

Wines also emphasised that whilst technology adoption is important, closing the digital skills gap is essential for SMEs to derive long-term benefits from these tools.

Jornt Moerland, SVP of Asia Pacific at Mendix, said the $150m injection to the Enterprise Compute Initiative is a step forward, lowering the barriers to entry for AI tools, optimising their tech resources and providing tailored technological solutions to address their unique business needs.

Moerland added that this will also support local enterprises in integrating novel technologies, such as AI-assisted development, into their existing processes and systems and in the long run enable them to cultivate an agile, change-ready, and adaptable tech stack.

However, Moerland warned that although exciting technologies like agentic AI are on the horizon, enterprises will continue to struggle to harness their full potential due to complexity and siloed implementations that limit their accessibility and adoption.

Dan Bognar, Vice President & Managing Director for JAPAC at HubSpot, discussed the challenges SMEs face in managing fragmented technology systems. He mentioned that businesses often use over 50 different applications to manage customer interactions, which can slow down teams and affect the value derived from their technology.

Bognar suggested that solutions that are easier to integrate and more unified across teams would help businesses achieve better results from their digital tools.

Yogesh Sangle, Global Head of Instarem, welcomed the relief measures, such as corporate tax rebates and co-funded wage increases, but also pointed out that SMEs continue to face rising operational costs.

Sangle acknowledged the $3b top-up to the National Productivity Fund and noted that further support may be needed for businesses to scale and digitise effectively. Sangle also highlighted the importance of upskilling through initiatives like the expanded SkillsFuture Level-Up Programme, which he sees as crucial for helping businesses manage the workforce challenges associated with digital transformation.

Meanwhile, SGTech, the trade association of Singapore said that though it welcomes initiatives aimed at enhancing SME financing and fostering business resilience, there are concerns over the lack of clarity on how these funds, particularly those for SME financing and the $150m allocated to the Enterprise Compute Initiative, will be distributed to maximise impact.

Nicholas Lee, Chair of SGTech stressed that cost and complexity remain major barriers to AI adoption, especially for smaller enterprises. Lee also pointed out that many SMEs lack the resources to implement effective workforce development strategies, suggesting the need for simpler application processes and more support to help them participate.

Despite these concerns, Lee welcomed the government's commitment to strengthening Singapore's technological leadership, particularly through AI adoption and talent development.

The group praised initiatives such as the $3bon top-up to the National Productivity Fund, which supports innovation and workforce productivity, as well as programs aimed at mid-career upskilling and job redesign.

Lee also highlighted the potential of the Private Credit Growth Fund to alleviate financial burdens on businesses and the focus on workforce transformation, especially for mid-career workers.