Budget 2025: Singapore’s manufacturing sector at a ‘significant turning point’, says SMF

SINGAPORE - The manufacturing sector is at a “significant turning point”, and Budget 2025 should help enhance Singapore’s competitiveness in the global arena.

Singapore Manufacturing Federation (SMF) president Lennon Tan said the sector faces many challenges, including increased global pressures, and needs to adapt.

SMF’s wish list for Budget 2025 – scheduled for Feb 18 – is built on four strategic pillars: sustainability, human capital, internationalisation and productivity.

The wish list is focused on six critical priorities: 

SMF has represented the interests of manufacturing and related industries here since 1932. It has about 5,000 corporate members, including SMEs and MNCs.

In its survey conducted in November 2024, 91 per cent of manufacturers said sustainability initiatives were important for global competitiveness. About 88 per cent stressed the critical need for workforce upskilling in emerging technologies like artificial intelligence (AI) and robotics. 

Eighty-five per cent sought more support for market diversification and supply chain resilience, and 82 per cent believe better access to capital is key for SMEs to drive innovation and growth.

Said Mr Tan: “These figures reflect the undeniable urgency to act. They also validate SMF’s strategic focus, positioning Budget 2025 as the critical support for driving long-term growth and ensuring Singapore’s manufacturing sector remains globally competitive.”

To help the sector in its green transition, SMF proposed the Government consider green equipment subsidies to offset the high costs of adopting energy-efficient machinery such as electric forklifts and solar panels.

Circular economy grants could help support research and development (R&D), while a carbon credit trading platform may simplify access to allow SMEs to monetise carbon reduction efforts or offset emissions. Collaborative green innovation hubs for green solutions with organisations like A*Star, funded by a government grant, would be helpful too.

To tackle the lack of skilled talent in AI, robotics and green technologies, SMF suggested the Government consider expanding SkillsFuture funding to cover curated local and overseas training programmes in robotics, the Internet of Things and sustainable manufacturing.

Another suggestion is to increase funding for programmes led by schools, trade associations and chambers to promote Stem (science, technology, engineering, and mathematics) education and manufacturing careers. 

Incentives to retain talent should include salary support, tax incentives and grants tied to structured, certified training programmes that result in measurable outcomes such as certification and improved career progression, SMF said.

To help SMEs expand overseas, suggestions include a regional trade support fund. This could help cover expenses such as regulatory compliance, market entry strategies and export diversification grants to help SMEs target Asean and other emerging economies, so as to reduce dependency on single regions.

Grants for local production of critical components and shared logistics hubs can help boost the sector’s supply chain stability, the federation said.

To improve access to technologies, SMF’s wish list includes grants to fund R&D projects in AI-driven and sustainable technologies; expanding pilot schemes for testing collaborative robots and smart sensors under real-world conditions; and enhancing subsidies to offset the high costs of digital adoption.

To boost SMEs access to funding, SMF suggested the Government consider expanding the Enterprise Financing Scheme to include high-risk, high-reward R&D projects, offer low-interest bonds for SMEs to fund capital-intensive projects, and simplify access to tailored grants for digitalisation, innovation and sustainability efforts.

To increase knowledge transfer between MNCs and SMEs, SMF suggested the Government consider an innovation partnerships programme, supported by grants for advanced manufacturing projects in sustainability and digitalisation.

Also, a supplier development grant or financial incentives for MNCs to integrate SMEs into their supply chains could help SMEs meet international standards.

“By aligning government support with industry priorities, Singapore can not only meet today’s challenges but also seize tomorrow’s opportunities,” SMF said.