KPMG's Viewpoint: 4 FAQs on How Singapore Businesses Can Lead in a Fragmented Global Economy

The global economy is at a turning point. Rising costs, fractured trade flows, and rapid technological disruption are reshaping the way businesses operate. For Singapore companies, the question is no longer how to survive these challenges—but how to lead.

Budget 2026 offers a roadmap for businesses to rewire their operations and thrive in this new reality. From adapting supply chains to navigating internationalisation and harnessing AI, the opportunities are there for those ready to act.

Here are four key questions businesses are asking—and how Budget 2026 can help them stay ahead.

Global trade is undergoing a seismic shift, and businesses can no longer afford to take a “wait and see” approach. To stay competitive, companies must actively rewire their trade, supply chain, and go-to-market models for resilience and flexibility.

The first step is to rethink supply chains. Businesses need to map their end-to-end exposure—by product, supplier, country, and tariff regime—to identify areas where they can build in more flexibility. Over-reliance on a single region or supplier is no longer viable. Instead, companies should adopt multi-region sourcing strategies, such as China+1 or ASEAN+India, to spread risk. For those navigating diverging trade blocs, dual supply chains optimised for different regulatory regimes are becoming essential to ensure operations can continue uninterrupted.

Trade and policy intelligence must also become a core capability. Businesses that monitor tariffs, sanctions, and export controls in real time will be better positioned to anticipate disruptions. Cross-functional trade risk teams can model “what if” scenarios—like sudden tariff hikes or port closures—and develop pre-agreed playbooks to respond swiftly.

Digital tools are another critical investment. Real-time visibility into shipments, inventory, and supplier performance is no longer a luxury—it’s a necessity. Advanced analytics can help businesses simulate landed-cost changes and evaluate alternative sourcing or routing options, giving them a competitive edge in a volatile environment.

Finally, businesses also need to rethink the balance between efficiency and resilience. In recent years, many companies have shifted from “just‑in‑time” to “just‑in‑case’’ strategies—building greater buffer capacity, dual‑sourcing critical inputs and strengthening inventory positions. This mindset is becoming even more relevant in today’s environment, where sudden tariff shocks or routing disruptions have become more common. Companies may also need to “sandbag” their operations—preparing contingency plans, financial buffers and rapid‑response mechanisms that allow them to stabilise operations regardless of how external conditions evolve.

Budget 2026 provides a strong foundation for these efforts. Enhanced Market Readiness Assistance (MRA) grants, expanded Double Tax Deduction for Internationalisation (DTDi) and the Business Adaption Grant (BAG) offer financial support for businesses exploring new markets or recalibrating supply chains. In addition, the Enhanced Enterprise Financing Scheme (EFS)—specifically its trade-related component EFS-Trade Loan—helps firms manage disruptions by supporting trade financing needs tied to supply chain adjustments, while the EFS-Fixed Asset Loan supports capital investments that may be needed for supply chain redesign.

Businesses that act now to rewire their operations will not only weather the storm but emerge as leaders in a fragmented global economy.

Rising costs are a reality, but businesses that focus on targeted, high-impact investments can still achieve growth amidst a tight labour market. For smaller enterprises, this means prioritising areas like digitalisation, sustainability, and innovation that deliver measurable returns and long-term value.

Budget 2026’s expanded Enterprise Innovation Scheme (EIS) and up to 70% grant support for digitalisation and productivity tools lower the barriers to transformative change. These tax measures now include support for AI‑related expenditures, and SMEs can pair this with the Budget’s emphasis on workforce AI‑upskilling—a necessary step as AI adoption becomes a national priority under the new National AI Council.

As the Government sharpens fiscal discipline, businesses should expect clearer KPIs attached to some transformation grants and tax incentives. Firms may increasingly be required to demonstrate measurable outcomes—including workforce upgrading, productivity gains, or capability enhancements—to fully benefit from these schemes. This ensures that investments in AI, digitalisation, and innovation translate into tangible economic value.

Sustainability initiatives, meanwhile, are not just about meeting regulatory requirements like carbon taxes or emissions standards. They also position businesses strengthen long-term operational resilience—for example, by improving energy efficiency, accessing green financing, enhancing brand reputation, or meeting customer and investor expectations for credible ESG performance.

The RIE2030 plan, backed by S$37 billion in national funding, also supports R&D and advanced manufacturing capabilities, providing smaller enterprises with opportunities to innovate and scale. The key is to identify which investments will not only address today’s challenges but also position the business for future growth.

Yes, but businesses need to approach internationalisation differently. It’s no longer just about exporting—it’s about integrating into ecosystems. This means forming partnerships and participating in regional value chains where resilience and compliance matter.

Budget 2026’s enhancements to the MRA grant, DTDi scheme and BAG grant are designed not only to support market entry and overseas expansion, but also to ease cost pressures associated with internationalisation. The higher automatic DTDi cap of $400,000 and expanded list of qualifying activities give companies more room to defray overseas business development expenses, while enhanced MRA support lowers the upfront burden of exploring and deepening activities in new or existing markets.

Singapore’s position as a trusted hub for digital and green trade, supported by initiatives like the EU–Singapore Digital Trade Agreement and Singapore-New Zealand Comprehensive Strategic Partnership, offers businesses a strong platform for global expansion.

Global fluency will be a key enabler for success. Businesses must develop deep market insights, adapt to diverse regulatory environments, and build sustainable, long-term relationships in fragmented global markets. AI fluency will also matter—Budget 2026 positions AI as a strategic national advantage, supported by the National AI Council and sectoral AI Missions. Companies that embed AI into their business operations such as market analysis, compliance workflows and customer engagement will be better placed to participate in regional value chains.

The EFS’ higher loan caps enable businesses to scale their overseas footprint, whether through operations expansion, fixed-asset investment or trade financing. Success in internationalisation today requires agility. Businesses must be prepared to adapt quickly to trade disruptions while building sustainable overseas growth models.

AI has the potential to transform businesses, but its success depends on how well it is integrated into strategy and operations. The formation of the National AI Council—chaired by the Prime Minister—signals the strategic importance Singapore places on AI as an economic and competitiveness imperative. This high‑level leadership helps accelerate regulatory alignment, remove bottlenecks and ensure AI adoption progresses coherently across sectors.

Budget 2026’s “Champions of AI” programme and expanded innovation incentives provide a strong foundation, but businesses must focus on building AI fluency—ensuring their workforce understands how to weave AI into business strategy to create value.

AI fluency isn’t just about technical expertise—it’s about equipping employees with the skills to identify where AI can unlock new revenue streams, enhance customer experiences, and drive innovation. For example, predictive analytics can help businesses anticipate market trends, while AI-powered automation can free up resources for higher-value activities.

As transformation funding becomes more targeted, businesses may increasingly need to demonstrate outcomes—including job redesign, productivity uplift, and capability deepening—to maximise access to AI‑related incentives and grants. This aligns with the broader push toward prudent public spending and ensures that investments in AI deliver tangible, economy‑wide benefits.

To realise AI’s full potential, businesses need to embed it into their decision-making and operational processes and align it with their broader strategic goals. This requires upskilling the workforce, fostering collaboration between technical and business teams, and focusing on measurable outcomes. When AI is treated as a strategic enabler rather than a standalone tool, it can drive long-term growth, innovation, and competitive advantage.