Singapore’s digital economy made up nearly 18 per cent of 2023 GDP

In a sign of success for Singapore’s digitalisation efforts, last year, the country’s digital economy contributed one out of every six Singapore dollars generated. 

The tech sector accounted for S$113 billion (US$85 billion) of the nation’s gross domestic product (GDP), according to the second digital economy report by the Infocomm Media Development Authority (IMDA) of Singapore.  

Making up 17.7 per cent of the nation’s GDP, the digital economy has overtaken the finance and insurance sectors in terms of gross contribution to Singapore’s economy and is in striking distance of the manufacturing sector.  

IMDA noted that from 2018 to 2023, the digital economy grew at a healthy compound annual growth rate (CAGR) of 11.2 per cent, nearly double the nominal GDP growth rate of 5.8 per cent for the entire economy, during this period. 

The Information and Communications (I&C) sector, which forms the vertical pillar of the digital economy, accounted for one-third of the total digital economy. 

The remaining two-thirds came from the horizontal impact of digitalisation across other non-I&C sectors, underscoring the broad-based contribution of digital technologies to Singapore’s economy, IMDA said.

IMDA’s Chief Executive, Lew Chuen Hong, said the tech sector remains a key driver of the Singapore economy. This underscores the critical need for all companies, especially small and medium-sized enterprises (SMEs), to embrace digital opportunities as an enabler and multiplier for growth. 

SMEs go digital 

IMDA noted that more than nine out of 10 SMEs have adopted digital in at least one of the six key areas examined, such as cybersecurity, cloud, e-payment, e-commerce, data analytics and artificial intelligence (AI), reflecting a 0.5 percentage point increase from 2022.  

The stat board noted that SMEs are also deepening adoption with 82 per cent of SMEs having used at least one digital solution to enhance general business functions in 2023, up from 69 per cent in 2021.  

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The general business functions that are most digitised by SMEs include accounting, document management and digital marketing. IMDA said estimates indicate that SMEs have reported an average of 50 per cent cost savings between 2018 to 2023 due to digitalisation. 

Strong demand for tech talent 

IMDA noted that despite a more cautious hiring outlook in the tech sector globally and in Singapore, the demand for tech talent remains strong.  

In 2023, tech jobs grew to 208,300, representing a steady 3.4 per cent year-on-year growth and accounting for more than five per cent of total employment, in Singapore.  

These roles offer competitive salaries and career opportunities, with resident tech professionals earning a median monthly salary of 1.5 times the overall resident workforce median monthly salary, IMDA said. In 2023 the median monthly salary of workers in the tech sector was S$7,000 as compared to S$4,550 overall. 

AI adoption on the rise 

AI adoption is on the rise and is led by non-SMEs, IMDA said. In 2023, 44 per cent of larger enterprises implemented AI-enabled solutions, more than double the 16.7 per cent in 2018. 

SMEs also improved their adoption rate, growing from 3.5 per cent in 2018 to 4.2 per cent in 2023. 

IMDA said it will continue to support enterprises, including SMEs, in adopting AI for their business needs.

The stat board said SMEs could consider adopting the AI-enabled pre-approved solutions available via IMDA’s chief technology officer-as-a-service initiative (CTO-as-a-Service). 

Currently, around 20 per cent of the pre-approved solutions are AI-enabled. IMDA said it will work towards raising the AI capabilities of these solution providers so that more pre-approved solutions are AI-enabled where feasible. 

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The aim is to enable 15,000 more SMEs to benefit from AI-enabled solutions within the next two years, IMDA said.  

GenAI Sandbox for SMEs 

For those SMEs who wish to explore generative AI (GenAI) solutions before they invest in deploying these solutions, IMDA has launched a GenAI Sandbox for SMEs which allows companies to experiment with pre-approved solutions.

The stat board noted that within the three months of the first GenAI Sandbox, 150 SMEs participated in areas such as marketing, sales, and customer engagement. Around 80 per cent found the solutions fitting and continued to use the solutions after three months. 

Following the success of the first GenAI Sandbox for SMEs, IMDA will launch the second iteration of the GenAI Sandbox for SMEs (GenAI Sandbox 2.0) on December 2.  

This is part of efforts to enable local SMEs to further strengthen their AI capabilities and provide continued access to new GenAI tools in their digitalisation journey. IMDA said the GenAI Sandbox 2.0 will continue to help SMEs experiment, innovate and adopt AI tools in new business areas.  

The GenAI Sandbox 2.0 is expected to provide approximately 15 solutions across three solution categories, namely generative web design, virtual assistants for customer engagement agents and GenAI for talent acquisition/onboarding.  

This is expected to benefit more than 300 SMEs across all sectors. These solutions were jointly curated by a panel of industry users and technical experts (in partnership with SGTech), based on suitability for SMEs. 

IMDA’s Lew noted that AI is an area with immense potential and would impact all sectors. He added that AI adoption has tripled from 2018 and more than 44 per cent of SMEs incorporate AI in their business models.