Singapore’s government will introduce structured, lower-risk pathways for small- and medium-sized enterprises (SMEs) to experiment with artificial intelligence (AI), Minister of State for Digital Development and Information Jasmin Lau announced, addressing concerns that many businesses are hesitant to adopt the technology due to potential costs and rapid obsolescence.
The move comes after numerous SMEs voiced anxieties about becoming “guinea pigs” in AI implementation, citing past experiences with technologies that quickly became outdated, according to remarks made during parliamentary discussions on January 22, 2026. Ms. Lau acknowledged these concerns, stating the government recognizes the necessitate to alleviate the burden of initial investment and workflow redesign.
Currently, funding schemes already subsidize set-up costs, but the primary barrier has shifted to capability development and the complex process of redesigning business operations to integrate AI effectively. Government support will increasingly focus on implementation, business process redesign, worker rescaling, and the “much harder work” of organizational change, Ms. Lau explained.
“We will make sure we are accountable, but we must also make sure that our SMEs – most of whom are genuine and often already tight on resources – we must make sure they do not get turned away too early by onerous and cumbersome paperwork,” she said.
The need for tailored support was echoed by Nominated Member of Parliament Mark Lee, who highlighted the financial challenges SMEs face when compared to larger firms. “Big firms have both the talent and financial muscle to spread this fixed cost. SMEs often cannot – if transformation succeeds, gains are gradual. If it fails, losses are immediate,” he stated.
MP Denise Phua (PAP-Jalan Besar) advocated for a more nuanced approach, proposing a classification system to categorize firms based on their AI-readiness – foundational, emerging, or advanced – allowing for targeted support. She also suggested the provision of government-funded AI coaches and strengthening the role of intermediaries like the Singapore Business Federation, the National Trades Union Congress (NTUC), and SME Centres.
“The goal is not to push every SME into complex AI systems overnight. The goal is disciplined, intentional transformation. If we get this right, AI becomes a renewal engine for SMEs. If we get it wrong, then we create a two-speed economy, not because help was absent, but because execution lacked precision,” Ms. Phua said.
Beyond SMEs, parliamentarians emphasized the importance of inclusive access to AI for all segments of the workforce. Workers in manufacturing and logistics could benefit from “physical AI,” such as collaborative robots assisting with heavy lifting or AI-powered translation tools for non-English speakers, according to MP Gerald Giam (WP-Aljunied).
Mr. Giam also proposed extending the 400 percent tax deductions on AI expenses to cover corporate AI subscriptions, providing workers with access to AI tools while maintaining data security. “Giving every worker a digital assistant should be a baseline goal for a nation that aspires to be an AI leader. This ensures that the benefits of the technology are shared by the employee and the employer alike,” he said.
MP Darryl David (PAP-Ang Mo Kio) stressed the need to address foundational digital skills, advocating for the extension of personal learning devices to primary school students. “Before You can talk about mastering AI software and advanced tools, we must ensure that every student starts from the same baseline. AI readiness depends on digital readiness,” he stated.
As of January 2026, approximately 95 percent of Singaporean SMEs have adopted at least one digital solution, with 15 percent currently utilizing artificial intelligence, according to Ms. Lau. The government’s AI Foundry program, unveiled by ASME on January 22, 2026, will provide up to $1 million in hardware, engineering support, and training services to support the development of ten real-world AI prototypes with SMEs, in partnership with Lenovo.
