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Ministry of Energy, Trade and Industry
3. Parliamentary replies

Oral reply to PQs on Impact of global AI capital expenditure and expansion on Singapore's economic, wage and jobs growth

9 September 2026

Questions:

Mr Saktiandi Supaat: To ask the Minister for Trade and Industry (Energy and Industry) given the growing contribution of AI-related activity to Singapore's economic growth (a) whether the Ministry has assessed Singapore's growth sensitivity to a material slowdown in global AI capital expenditure; and (b) what observations have been made on the capturing of value-added AI growth by local (i) enterprises (ii) research and development and (iii) intellectual property.

Mr Edward Chia Bing Hui: To ask the Minister for Trade and Industry (Energy and Industry) given the growing contribution of AI-related activity to Singapore's economic growth (a) whether the Ministry has assessed how much of this growth has translated into productivity gains, wage growth, new job creation and value capture by local enterprises in AI-related and adjacent sectors; and (b) how the Government will monitor whether AI-driven growth benefits the wider economy.

Oral Answer (to be attributed to Minister for Trade and Industry (Energy and Industry) Dr Tan See Leng)

1.       My response will cover the question raised by Mr Liang Eng Hwa in today's Order Paper, as well as questions by Mr Edward Chia Bing Hui and Mr Saktiandi Supaat for subsequent sittings. If the Members are satisfied with the response, they may wish to withdraw their questions after this session.

2.       AI-related activity is expected to contribute significantly to Singapore's economic growth in the near and longer term. In the near term, strong global capital investment in AI infrastructure has benefitted outward-oriented sectors that are plugged into the related supply chains. These include the electronics and precision engineering clusters of the manufacturing sector, as well as the machinery, equipment and supplies segment of the wholesale trade sector.

3.       A slowdown in global AI capital expenditure could weigh on growth in these AI-linked sectors. Downside risks to global AI capital expenditure include tighter financial conditions globally, which could make financing more costly for these investments. In turn, a sudden fall in global AI-related capital spending could trigger a loss of investor confidence, which could result in sharp corrections in global financial markets, with negative spillovers on global economic activity.

4.       Even as we keep a close watch on the AI-related risks, we would like to assure Members that Singapore's economy is well diversified. Apart from the AI-linked sectors mentioned earlier, other sectors such as information and communications, professional services, real estate, and construction are also expected to support GDP growth for the rest of 2026.

5.       For AI to propel our longer-term economic growth, we are supporting our enterprises, which are at different stages of readiness, to increase AI adoption and undertake AI-driven transformation to raise productivity and innovation. We are also supporting our workers to build the skills and confidence to work with AI, take on redesigned roles, and move into new and higher-value opportunities.

6.       We have observed early signs of progress. A recent MOM survey found that around three in ten firms had adopted AI. Of these, about seven in ten reported improvements in worker productivity.¹ AI is also complementing rather than replacing labour, with more firms redesigning existing roles and creating new AI-related jobs, rather than reducing headcount. This is consistent with a recent MTI study, which found that firms using AI saw higher revenue and total employment, with those that deepened their AI capabilities seeing even higher gains.

7.       Beyond economy-wide AI adoption, we are building up our research, engineering, and commercialisation capabilities. As announced at Budget 2026, we are launching National AI Missions in Advanced Manufacturing, Financial Services, Connectivity, and Healthcare. We will work with industry and research partners to translate the AI research into deployable applications, drive AI-enabled transformation at scale, and build new businesses. Alongside this, leading AI companies, including Google DeepMind and OpenAI, have also set up research labs in Singapore to anchor substantive research and engineering work here. These further strengthen our local research ecosystem, create high-quality jobs for Singaporeans, and build on our broader investments in AI compute and talent.

8.       The Government will continue to monitor the impact of AI on our economy, including enterprise-level AI adoption and its effects on firm performance. Through the National AI Council, we will coordinate our national AI efforts and ensure that AI-driven growth benefits the wider economy.