Viewpoint Friday: AI Boom, Rising Costs and Singapore’s Multi-Speed Economy

Why It Matters

The divergence means policymakers and businesses must balance supporting high-value, tech-led growth with measures to contain cost pressures and competitiveness for cost-sensitive operations; missteps could deepen inequality, spur more offshoring and damp consumer demand.

Summary

Singapore’s economy is becoming distinctly multi-speed: AI-driven demand for semiconductors and tech exports is lifting trade and certain manufacturing pockets, even as rising energy and commodity costs squeeze services, F&B and everyday goods. Businesses are responding with cost-passing, efficiency drives and some operational relocation — exemplified by Gardinia and other firms moving production to lower-cost Johor — while headquarters, R&D and higher-value functions remain in Singapore. The week’s headlines also highlighted restructuring and job cuts, persistent inflationary pressures (reflected in items from COE prices to raw materials), and the knock-on effects of global risks such as the Middle East energy squeeze. Overall, headline trade strength masks uneven performance across sectors and growing cost pressures on households and smaller firms.

Original Description

This week on Viewpoint Friday, Lynlee Foo takes a step back to connect the dots behind some of Singapore’s biggest stories — from AI investment and booming tech sectors to rising business costs, restructuring and growing pressure on workers.

In Part 1, Song Seng Wun, economic advisor at fintech firm SDAX shares his “bellynomics” perspective on what businesses and consumers are experiencing on the ground, as stories like Gardenia shifting production to Malaysia, rising COE prices and global layoffs raise questions about whether different parts of Singapore’s economy are moving at different speeds.

In Part 2, Ian Tan, generative AI coach and lecturer at Nanyang Technological University’s Wee Kim Wee School of Communication and Information — discusses how AI is rapidly entering everyday working life, why companies and workers are feeling pressure to adapt, and how people can approach AI without getting overwhelmed.