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Digital Transformation Singapore: SG Bets on Internet to Revive Economy

Digital Transformation Singapore
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The world has never relied heavily on online platforms before the COVID-19 pandemic disrupted normalcy, forcing people to move into cyberspace so that they could connect and interact with others safely.

This is also the practical reason why Singapore — which recently suffered its worst recession ever due to lockdown protocols necessitated by the health crisis — is placing its bets on digital transformation to revive the economy.

A huge chunk of the city-state’s budget for 2021 goes to this initiative: Singapore believes that letting businesses harness the internet’s potential would be a key factor in leading the country out of the economic slump. 

For the coming years, the government would extend assistance to small to medium enterprises (SMEs) and large businesses to support their migration to online platforms.

Singapore Deputy PM on the Country’s Digital Move

Singapore Deputy Prime Minister Heng Swee Keat said this in his budget debate round-up speech, assuring both startups and mature businesses of support as they move online.

“First, for high-growth enterprises, including startups: I will ensure that they continue to have access to financial capital by extending and enhancing the Enterprise Financing Scheme – Venture Debt programme,” Heng said.

“Second, more mature enterprises, from micro and small, to medium and large enterprises, should also invest in new and emerging technologies to sharpen their competitiveness. To encourage them to do so, the Government will co-fund their adoption of digital solutions and new technologies,” he added.


A Gateway Out of the Crisis

Singapore was one of the hard-hit economies in the ASEAN region, despite having a relatively lower COVID-19 infection rate compared to its neighbors and even with the provision of stimulus packages to workers and permanent residents.

Earlier forecasts said that Singapore’s gross domestic product (GDP) would contract by 5.8 percent in 2020, on a year-on-year basis. The numbers released by Singapore’s Ministry of Trade and Industry were slightly lower but still alarming: the GDP growth was at a negative 5.4 percent, making it one of the slowest-performing economies in the area.

Singapore is by no means the worst economy in Southeast Asia, but figures from the Asian Development Bank showed that other countries like Indonesia (-1.8 percent) and Cambodia (-3.0 percent) posted milder GDP contractions in 2020.

This is also why the government encourages and helps businesses match the post-pandemic world’s demands of physical distancing and stay-at-home policies: they firmly believe that shifting to online platforms and using the internet for their daily operations will be important even if the world beats COVID-19.

Budget for the Digital Transformation Initiative

Singapore has already allocated S$24 billion towards this initiative, which would be spent on several items that would help local businesses and ensure that industries are attuned to the current world’s needs and demands.

One of the items within the said budget is Digital Transformation Support, which covers several programs, including creating:

  • Chief Technology Officer Service
  • Digital Leaders Programme
  • Open Innovation Platform
  • Emerging Technology Programme.

These programs are seen to help companies establish their digital presence by exploring the realm of social media and competitive websites while utilizing technologies available like artificial intelligence mechanisms. This, in effect, is also seen as a form of expansion, as there may be some companies that will already cater to customers and consumers outside of Singapore.

How Will Singapore Digitalize?

It may be weird to hear this, but several viewpoints say that Singapore — a commercial hub at the heart of Southeast Asia known for investing and tech export products — has to credit the COVID-19 pandemic for ushering in its digital transformation.

It is not a case of weak internet infrastructure: data gathered by Speedtest by Ookla for February 2021 showed that Singapore ranks top worldwide in terms of average fixed broadband download speeds and 24th for mobile internet.

Rather, it is more of a budgetary decision on behalf of small to medium enterprises not to invest fully in technological or digital developments. Reports all over Singapore before the pandemic started showed that small businesses are hesitant to put their hard-earned income over digital needs, as these may be used for other more important needs back then.

Covid-19 as a Catalyst for Digital Transformation

Singapore Business Federation’s National Business Survey for 2020 showed that the COVID-19 pandemic, in fact, accelerated the digital transformation project: 40 percent of the businesses interviewed supposedly reported an increase in investments related to new technology.

“Some of the digitalisation steps involve raising productivity using collaborative technology (45%), streamlining operations and automating processes (44%), and using data analytics to help with decision-making (38%),” the survey report said.

This upsurge in digital transformation can be further accelerated by the Emerging Technology Program, which would co-fund the digitalization expenses of a company as they try and adopt several innovations like 5G-related technologies, artificial intelligence, and others.

According to Singapore’s Ministry of Finance, the Infocomm Media Development Authority would release more details soon on how startups and small to medium enterprises can avail of the said program.

In creating a Chief Technology Officer as a Service (CTOaaS), Singapore would provide small to medium enterprises quick access to professional consultancies from information technology experts and real-time digital advice on problems — all of which would help investors, business owners, and employees understand the digitalization needs and requirements.

How Singapore Would Help Big Businesses

But aside from help for startups and SMEs, the government has also allotted S$500 million — which was matched by state investment company Temasek Holdings for a total of S$1 billion — to large local enterprises (LLEs), which would need funding for the innovation and upscaling of their business operations.

The investment allowance set aside for businesses that would employ large-scale automation projects will also be extended until March 2022. Under this program, projects that have received the Enterprise Development Grant may be eligible for 100 percent of the investment allowance.

Making SG’s aid to businesses work

Singapore will also develop a core of digital leaders within various industries, helping companies push their digitalization needs by equipping them with digital capabilities and talent that would be necessary to innovate their business and further expand.

Businesses can then use these wide arrays of assistance to formulate a response, reader, and user-friendly websites to encourage customer engagement. Social media sites can also be easily set up, but crafting a strategy involves marketing and a deep understanding of social media algorithm and coding, hence needing a technology expert’s advice.

Digitalizing payment schemes would also come in handy, especially with banknotes and coins’ exchange discouraged to prevent passing viruses amid the COVID-19 pandemic.

Some industries can also employ artificial intelligence technologies, especially in manufacturing and customer response, which can help workers and company managers carry out their tasks.


Digitalization’s real-world benefits

Singapore’s digitalization plan does not only sound good on paper: the government has vowed to provide several tax incentives for companies and businesses that would expand their operations online to encourage managers to acquaint themselves with operations based on the internet.

There would also be double tax deductions under the Double Tax Deduction Scheme for Internationalization (DTDi), which will provide a 200 percent tax deduction for its expenses related to international expansion.

On the flip side, even if companies are not given perks for venturing into cyberspace, starting ventures online is a good investment, especially as the world becomes increasingly digital due to the COVID-19 pandemic.

A ton of studies have already revealed that the COVID-19 crisis and the stay-at-home policies that governments have implemented led to more time for people to check out their gadgets, especially since people also do need to check on the health condition of their friends and family.

For example, companies with a steady digital presence — which means having handy and important information available — are more likely to be patronized by customers than businesses whose details are not present online.

Aside from the ease of accessing information about the business or the product, websites also provide modern-age people a sense of legitimacy as companies nowadays are expected to have their own webpage.

The Risks of Shifting Online

Speaking of websites, it is highly likely that pages pleasing to the eyes of internet users would generate more traffic compared to poorly-created sites, which may only cause confusion and disappointment.

These factors are essential for expanding as an international company or attracting investors who want to invest in secure businesses only.

But it must be noted that going for digital transformation — especially if without enough help from technology experts — may also be disastrous. As mentioned earlier, websites that are not created properly may look unpleasant, cause confusion because of missing items, and dissuade people from buying a company’s product or services.

There’s also the need for an additional workforce, although this may be countered by the government’s assistance. Still, doing a bad job online would expose your company to cyber attacks, which may put your data in grave danger from hackers.

You can put your business on the internet for free, but paid marketing boosts can widen your reach in an instant.  

Do you need funds to fully digitize your business but have limited time finding the best business loan deals in the market? Consult with Loan Advisor today and get up to 3 free loan quotes for free! Loan Advisor is a trusted loan comparison site that helps businesses spot the most suitable offer for their financial needs.

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