Budget 2026: Strengthening Singapore’s Economic Resilience and Growth – An Analysis of SBF and PwC’s 18 Recommendations
Abstract
As Singapore prepares for a more uncertain global economic landscape in 2026, the Singapore Business Federation (SBF) and PwC Singapore have jointly released 18 strategic recommendations aimed at enhancing the nation’s economic resilience, competitiveness, and long-term growth trajectory. Based on sectoral insights, business surveys, and ongoing policy reviews such as the Economic Strategy Review and the Economic Resilience Taskforce, these recommendations are organized into five priority areas: accelerating regional integration, strengthening intellectual property (IP) ecosystems, advancing decarbonization and sustainability, supporting workforce innovation, and improving access to capital and technological transformation. This academic paper critically examines the context, rationale, and implications of the SBF–PwC proposal for Budget 2026, analyzing its alignment with national strategic objectives and assessing the feasibility and potential impact of each key recommendation. The paper concludes with policy implications and recommendations for future fiscal planning.
- Introduction
On January 12, 2026, the Singapore Business Federation (SBF), in partnership with PwC Singapore, unveiled their comprehensive set of 18 policy recommendations for the upcoming Budget 2026. These proposals were presented at a joint press briefing held at PwC’s offices in Singapore, signaling a coordinated effort by the private sector and professional services to guide national fiscal policy amid evolving domestic and international challenges.
With the Ministry of Finance actively soliciting input from stakeholders since December 2, 2025, and Prime Minister and Finance Minister Lawrence Wong scheduled to deliver the Budget Statement on February 12, 2026, the SBF–PwC recommendations form part of a broader consultative process underpinning Singapore’s strategic economic governance. The 18 recommendations—distilled from 56 detailed proposals—are structured around five core pillars designed to secure economic resilience, nurture innovation, and foster inclusive growth.
This paper provides a rigorous academic analysis of the SBF–PwC 2026 Budget recommendations. It situates the proposals within the context of Singapore’s macroeconomic outlook, examines the underlying rationale for each priority area, assesses the alignment with national strategies such as the ASEAN Chairmanship 2027, and evaluates the feasibility and expected impact of the suggested measures.
- Context and Rationale: Economic Outlook for 2026
2.1. Macroeconomic Landscape
In 2025, Singapore recorded an impressive GDP growth of 4.8%, driven largely by strong performance in high-value export sectors—particularly pharmaceuticals and semiconductors—which together account for nearly 40% of exports to the United States (Department of Statistics Singapore, 2025). However, this growth was partially inflated by the phenomenon of “front-loading”—a strategic acceleration of exports in anticipation of potential U.S. tariffs under the new Biden administration and the impending expiration of the U.S.-China trade truce in November 2026.
Looking ahead, the government has adopted a more conservative forecast of 1% to 3% growth for 2026, reflecting mounting global uncertainties, including shifting U.S. trade policy, geopolitical tensions in the South China Sea, and weakening demand in key Asian markets (Ministry of Trade and Industry, 2026). As SBF CEO Kok Ping Soon observed during the briefing, “The truce between China and the US will come to an end sometime in November, so we really don’t know what’s going to happen.” This uncertainty underscores the need for proactive fiscal interventions to maintain momentum and insulate the economy from external shocks.
2.2. Evolving Structural Challenges
Beyond cyclical headwinds, Singapore faces persistent structural challenges:
Demographic aging: The median age of the workforce is rising, with over 25% of citizens aged 65 and above by 2030 (Population White Paper, 2023).
Tight labor market: Low unemployment (2.1% in Q4 2025) constrains expansion, particularly in sectors like construction, healthcare, and hospitality.
Climate commitments: As a signatory to the Paris Agreement and host of the ASEAN Centre for Climate Change, Singapore must accelerate its transition toward net-zero emissions by 2050.
Geopolitical positioning: With Singapore assuming the ASEAN Chairmanship in 2027, there is a strategic window to deepen regional integration and assert leadership in digital and green trade.
Against this backdrop, the SBF–PwC proposals aim not merely to sustain growth but to redefine the sources of competitiveness in a post-pandemic, high-tech, and low-carbon global economy.
- Methodology and Proposal Framework
The SBF–PwC report draws on three primary sources of data and analysis:
Business Surveys: Over 1,200 enterprises across sectors were surveyed in late 2025, with particular focus on SMEs and multinational corporations.
Industry Roundtables: Sector-specific dialogues were conducted with stakeholders in finance, manufacturing, healthcare, and logistics.
Policy Benchmarking: Comparative analysis of IP financing frameworks in China, Hong Kong, and South Korea; assessment of carbon market developments in Europe and ASEAN.
From 56 initial proposals, 18 recommendations were consolidated into five priority clusters:
Priority Area Key Themes
- Accelerating ASEAN Integration Regional economic corridors, digital trade facilitation
- Unlocking Intellectual Property Value IP financing, collateralization, valuation standards
- Driving Decarbonization & Sustainability Carbon trading, green grants, green jobs
- Supporting Workforce Innovation Older worker retention, foreign labor quotas
- Enhancing Business Competitiveness Digital transformation, AI adoption, M&A support
These clusters reflect a shift from last year’s heavy emphasis on workforce transformation, allowing space for new growth frontiers such as innovation financing and regional economic architecture.
- Detailed Analysis of Recommendations
4.1. Accelerating ASEAN Integration
Recommendation 1: Expand the Johor-Singapore Special Economic Zone (JS-SEZ) to Include Batam, Bintan, and Karimun (BBK)
The proposal to extend the JS-SEZ across the Riau Islands aims to create a tri-nation integrated economic corridor linking Singapore, Malaysia (Johor), and Indonesia (BBK). This aligns with ASEAN’s Master Plan on Connectivity 2025 and could position Singapore as a regional hub for advanced manufacturing, logistics, and R&D.
Feasibility and Challenges:
Requires tripartite legal, customs, and regulatory harmonization.
Potential resistance from Malaysian and Indonesian protectionist interests.
Infrastructure gaps in BBK, including power and digital connectivity, require investment.
Estimated Impact:
Modeling by PwC suggests a 12–15% increase in FDI inflows into the region within five years, with spillover benefits in job creation and SME participation.
Recommendation 2: Accelerate Implementation of the ASEAN Agreement on Electronic Commerce
SBF and PwC urge faster ratification and implementation of the ASEAN Digital Economy Framework Agreement (DEFA), including cross-border data flow rules and digital identity recognition.
Policy Implication:
Singapore is well-positioned to act as a digital gateway for ASEAN, facilitating fintech, e-commerce, and cloud services. Harmonized standards could reduce compliance costs for regional businesses by up to 30%.
4.2. Unlocking Intellectual Property Value
Recommendation 3: Establish a Digital IP Collateral Registry
One of the most significant barriers to innovation financing in Singapore, according to PwC, is the underutilization of intellectual property as collateral. Unlike China and South Korea, where IP-backed lending accounts for 5–7% of total corporate credit, in Singapore, it remains under 1%.
The proposal calls for:
A centralized digital registry for IP assets (patents, trademarks, copyrights).
Government guarantee schemes covering 70–80% of loan value, up from the current 50–60%.
Economic Rationale:
Startups and R&D-intensive firms often lack tangible assets but hold valuable intangible IP. Enabling IP-backed financing can unlock S$8–12 billion in latent capital, particularly in biotech, medtech, and AI sectors.
Recommendation 4: Build Valuation Expertise in Financial Institutions
PwC identifies a skills gap in IP valuation among Singaporean banks. The recommendation calls for:
Mandatory training programs in IP valuation for commercial bankers.
Incentives for banks that establish dedicated IP finance desks.
Collaboration with institutions like IPOS and NUS Law to develop standardized valuation methodologies.
International Benchmark:
South Korea’s KOTRA offers state-subsidized IP valuation vouchers, which increased loan approvals for SMEs by 40% between 2021 and 2024.
4.3. Driving Decarbonization and Sustainability
Recommendation 5: Scale Up Domestic Carbon Trading Mechanism
Singapore launched a carbon pricing scheme in 2019, with a carbon tax of S$25/tCO₂e in 2024, rising to S$45 by 2026. SBF and PwC recommend:
Expanding the coverage of emitters beyond the current 50 large facilities.
Creating a domestic carbon credit marketplace for voluntary offsets.
Recognizing nature-based solutions (e.g., mangrove restoration, urban forests) as eligible offset mechanisms.
Environmental Impact:
A well-functioning carbon market could reduce net emissions by an additional 5–8 million tonnes annually by 2030.
Recommendation 6: Introduce Green Transition Grants for SMEs
While large firms have access to green loans and sustainability-linked bonds, SMEs face barriers to decarbonization. The proposal advocates for:
Grants covering up to 70% of costs for energy audits, equipment upgrades, and ESG reporting.
A “Green Star” certification to enhance market access and consumer trust.
Case Study:
Germany’s “KfW 530” green SME subsidy has supported over 200,000 firms since 2020, reducing SME emissions by 18% on average.
4.4. Supporting Workforce Innovation
Recommendation 7: Enhance Incentives for Hiring and Retaining Workers Aged 55 and Above
With the retirement age extended to 65 and re-employment up to 70, the recommendations include:
Increasing the Employment Credit (EC) from 15% to 25% of wages for workers aged 55–65.
Introducing a “Silver Flex” scheme allowing phased retirement and job redesign.
Social Impact:
Older workers possess deep institutional knowledge, especially in engineering and finance. Retaining them can mitigate productivity losses due to attrition.
Recommendation 8: Increase Foreign Worker Quotas in Critical Sectors
Despite automation efforts, sectors like construction, healthcare, and marine engineering face acute labor shortages. The proposal calls for:
Targeted increases in Dependency Ratio Ceilings (DRC) for healthcare and infrastructure projects.
Linking quotas to training commitments (e.g., sponsor local workers for upskilling).
Balancing Act:
The government must avoid undermining wage progression for locals. A “training levy top-up” mechanism could ensure that higher quotas are conditional on enhanced SkillsFuture contributions.
4.5. Enhancing Business Competitiveness
Recommendation 9: Modernize the Productivity Solutions Grant (PSG)
Currently, the PSG supports SMEs in adopting off-the-shelf digital tools (e.g., accounting software, CRM systems). However, as firms mature, they require:
Funding for custom AI agents, workflow automation, and cloud-native platforms.
Post-implementation technical support and cybersecurity audits.
The proposal recommends:
A new “PSG+” tier covering up to 80% of AI integration costs.
Approval of vendors beyond the current pre-approved list.
Expected Outcome:
AI adoption could increase productivity by 20–35% in logistics, retail, and professional services, according to PwC’s modeling.
Recommendation 10: Facilitate SME Access to M&A Opportunities
Many SMEs lack succession plans. The recommendations include:
Tax incentives for cross-border mergers and acquisitions involving local SMEs.
Establishment of an SME M&A matchmaking platform under EnterpriseSG.
Economic Significance:
There are over 230,000 SMEs in Singapore, and nearly 40% are owner-operated by individuals aged 60+. Without succession, up to S$100 billion in assets could face disruption by 2030.
Recommendation 11: Simplify Listing Rules on Catalist and SES
To deepen capital markets, the report calls for:
Reduced minimum market capitalization for Catalist listings.
Fast-track approval for ESG-compliant firms.
Incentives for secondary listings by ASEAN unicorns.
Strategic Goal:
Position Singapore Exchange (SGX) as the preferred listing venue for Southeast Asian growth companies, competing with Hong Kong and Nasdaq.
- Comparative Analysis and International Benchmarks
Policy Area Singapore (Current) South Korea Germany SBF–PwC Proposal
IP Financing 50% risk share 70–80% 60–70% 70–80%
Carbon Pricing S$45/tCO₂e (2026) KRW 80,000 (~S$85) €90 Expand to SMEs
Older Worker Incentives 15% EC 20% wage subsidy 30% Proposed 25%
AI Grant Coverage 50–70% 70% 60% 80% (PSG+)
Foreign Worker DRC (Construction) ~60% N/A N/A Targeted increase
The data suggest that Singapore currently trails regional and global leaders in innovation finance and labor flexibility. The SBF–PwC recommendations aim to close these gaps.
- Critical Evaluation
Strengths of the Proposal Set
Forward-looking: Focuses on structural transformation rather than short-term stimulus.
Evidence-based: Grounded in business surveys and international benchmarking.
Holistic: Links innovation, workforce, sustainability, and regional strategy.
Implementable: Most recommendations require regulatory or fiscal tweaks, not new institutions.
Limitations and Risks
Coordination Challenges: Expanding the JS-SEZ requires multi-jurisdictional cooperation, which may be slow.
Fiscal Cost: Increasing EC rates, expanding PSG, and boosting carbon grants imply additional spending (estimated S$1.2–1.8 billion over three years).
Inflationary Pressures: Raising foreign worker quotas could suppress wage growth in low-skilled sectors.
Measurement Gaps: No clear metrics proposed for tracking IP financing or carbon credit efficacy. - Policy Implications for Budget 2026
The SBF–PwC recommendations present a coherent vision for Budget 2026 that emphasizes strategic enablement over direct handouts. Key implications include:
Fiscal Priorities: Shift from consumption support to investment in intangible capital (IP, data, skills).
Regulatory Reform: Need for agile, cross-agency governance (e.g., IPOS, MAS, MTI) to implement IP collateral framework.
Regional Diplomacy: Use 2027 ASEAN Chairmanship to push for digital and green trade pacts.
Private-Public Co-Investment: Leverage government guarantees to crowd in private capital, especially in green and innovation finance.
- Conclusion
The 18 recommendations put forth by the Singapore Business Federation and PwC Singapore represent a timely and strategic roadmap for Budget 2026. In the face of global uncertainty, aging demographics, and intensifying regional competition, the proposals offer a balanced mix of fiscal incentives, regulatory modernization, and structural reforms designed to future-proof Singapore’s economy.
Notably, the shift toward IP monetization, regional integration, and sustainable transition reflects a maturing understanding of 21st-century competitiveness—one that values knowledge, connectivity, and resilience as much as physical infrastructure and labor.
While implementation will require careful calibration—particularly in labor policy and cross-border coordination—the overall package is both ambitious and achievable. If adopted, these recommendations could catalyze a new phase of inclusive, innovation-driven growth, ensuring that Singapore remains not just economically resilient, but globally relevant.
- Recommendations for Policymakers
Adopt the Digital IP Collateral Registry as a flagship initiative for the 2026 Budget, with a pilot launch by Q3 2026.
Establish a Tripartite Taskforce (SBF, MTI, MAS) to fast-track the expansion of the JS-SEZ to include BBK.
Introduce PSG+ for AI and Custom Solutions with enhanced support for cybersecurity and maintenance.
Review Dependency Ratio Ceilings annually, linking adjustments to productivity and training outcomes.
Commit to publishing a National IP Financing Index to track progress and benchmark against peers.
References
Department of Statistics Singapore. (2025). Annual GDP Report 2025.
Ministry of Trade and Industry. (2026). Economic Survey of Singapore 2025.
Singapore Business Federation & PwC Singapore. (2026). Budget 2026 Recommendations Report.
IPOS International. (2025). Global IP Financing Trends.
ASEAN Secretariat. (2024). ASEAN Digital Economy Framework Agreement (DEFA).
OECD. (2025). Intellectual Property and Economic Growth: A Comparative Study.
World Bank. (2025). Climate-Smart Fiscal Policy in Southeast Asia.
PwC Global. (2025). AI Adoption Index: Asia-Pacific Edition.