Navigating Singapore’s economic future: AI as a catalyst for growth in a changing landscape

By Yap Hsien Yew, Jasmine Yap and Jason Yeo

What is the first thing that comes to mind when you hear or read the words “Artificial Intelligence (AI)”?

Does it instill fear or incite excitement about what the future holds?

Not too long ago, AI might have seemed like the stuff of Hollywood movies; dystopian scenes where machines attempt to take over the world and control humans. Today, AI, whether we are aware or not, is invading our everyday lives – both at work and at home.

For us, a recent interaction with ChatGPT gave a fresh perspective on AI. One quiet weekend afternoon (with both of us mulling about AI over coffee), we faced the ultimate writer’s block when starting this article: a blinking cursor on an empty Word document.

We knew what the article was meant to be – AI’s role in transforming economies - but struggled to crystallise our thoughts into a flow that was linear and easy to understand. So, we turned to ChatGPT for ideas, and even though we knew better, we half braced for a sci-fi-esque response.

As expected though, what we got was a gentle nudge in the right direction. This simple personal experience confirmed that AI is not about replacing humans and humanity altogether; it is about enhancement, making our ideas and dreams take flight.

And, in the broader context of Singapore’s ongoing journey towards becoming a Smart Nation, AI is not Terminator’s SkyNet – an ominous force out to destroy, but more like Jarvis in Iron Man (the good one of course) - a partner in the quest for innovation and a cornerstone of the economic resilience that Singapore is building.

Singapore’s AI journey on the big screen

Singapore’s latest blockbuster opens with a 2024 economic outlook that presents a spectrum of possibilities, from steady growth to potential challenges arising from geopolitical tensions and global economic uncertainties. Amidst global uncertainties, Singapore remains steadfast in its commitment to harnessing digital innovation for economic growth and societal well-being. As we look forward to the upcoming Singapore Budget 2024 – the protagonist or change maker if you will, it is becoming increasingly clear that Singapore’s future lies in the transformative power of emerging technologies, particularly on digitalisation and AI.

Whilst harbouring risks such as bias amplification and job displacements, AI also offers unparalleled growth opportunities. The key lies in businesses integrating AI solutions into their strategies, and targeted grants can play a pivotal role in expediting this process. One facet of AI, generative AI (GenAI), has shown immense potential across various sectors, promising increased productivity, efficiency, and
financial gains.

Gen AI driving productivity: A catalyst for economic growth

Studies have demonstrated that the use of GenAI tools can boost worker productivity significantly. In a Fortune 500 tech company, GenAI led to a 14% increase in productivity. The application of GenAI, such as ChatGPT, showcased a remarkable 66% improvement in user performance across complex tasks, underscoring its potential to enhance productivity.

Financially, GenAI has already proven its worth, with companies reporting substantial profits in 2023, attributed to the growth in GenAI. The adoption of AI is not limited to specific industries; it extends to sales and marketing, where Salesforce reported that 75% of GenAI users aim to automate tasks and improve work communications, potentially leading to significant productivity gains and increased profits.

However, it is essential to recognise that the outcomes demonstrated by GenAI can vary based on the specific application and the company’s implementation strategy.

Government initiatives and grants

Singapore has been proactive in fortifying its digital infrastructure and promoting the adoption of advanced technologies, including AI. Initiatives such as the Digital Connectivity Blueprint (DCB) and grants like the Enterprise Development Grant and Productivity Solutions Grant underscore the government’s commitment to future-proofing digital infrastructure and encouraging businesses to embrace digitalisation.

To support companies in gaining hands-on experience with GenAI solutions, Enterprise Singapore and the Infocomm Media Development Authority launched the GenAI Sandbox for small and medium-sized enterprises on 7 February 2024. This is a first step in enabling local SMEs greater access to GenAI and builds on both agencies’ ongoing efforts to strengthen AI development and the ecosystem in Singapore.

Overall, the incentive and grant framework in Singapore aims to attract companies contributing to economic growth through investment, technology adoption, and innovation. These incentives play a pivotal role in promoting digital transformation, aligning with the goals of the DCB and reinforcing Singapore’s position as a leading digital hub.

Budget 2024: accelerating AI adoption for economic growth

As Budget 2024 approaches, there is an opportunity for the government to further incentivise businesses to adopt AI technologies. Singapore has recently updated its National AI Strategy or NAIS 2.0, back in December 2023 outlining the government’s ambition and commitment to building a trusted and responsible AI ecosystem, driving innovation and growth through AI. This could include grants covering employee upskilling and reskilling programmes and the adoption of AI and machine learning technologies, and fostering the creation or testing of training datasets, which could go some way in alleviating challenges such as the talent crunch brought on by an ageing workforce.

Additionally, incentives designed to facilitate digitalisation progress, such as deductions or credits for hiring talent with digital expertise or investing in digital infrastructure and software, could expedite the digital transformation among businesses by providing crucial resources.

Broadly, the potential of GenAI, especially when supported by targeted grants, opens doors for Singaporean businesses to align their strategies with government initiatives. This alignment can not only benefit individual businesses but also contribute to broader economic, societal, and technological advancements. Budget 2024 would offer businesses clarity on how government initiatives can synergise with industry prospects and contribute to the nation’s goals of economic growth, workforce development, sustainability, inclusivity, and technological advancement.

Seizing the AI-rich future for collective prosperity

It is our hope that AI will be a catalyst for positive change in Singapore’s economy and society. The question is – how would Singapore’s AI movie pan out and what roles do Singapore businesses play?

From enhancing productivity to fueling economic growth and driving societal progress, AI is more friend than foe if applied wisely.

Whilst Singapore navigates the digital landscape, businesses should capitalise on government grants and initiatives as it will not only benefit them but also Singapore’s success.

As we roll the end credits of this article, let us walk this journey together and look at AI with open minds, with excitement about the possibilities. The real story of AI in Singapore and beyond is not one that is scripted in the dramatic tones of Hollywood. Instead, it will be written by the countless successes of businesses and everyday individuals who use AI to unlock new potential.

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