AI boosts productivity for Singapore firms, but adoption remains limited: MOM

About 70.7% of AI-using firms reported productivity gains, whilst 71.5% of firms have yet to adopt the technology.

Productivity gains are already emerging among Singapore firms that use artificial intelligence, even as overall adoption remains at an early stage, according to the Ministry of Manpower’s inaugural report on AI adoption among firms.

About 70.7% of firms using AI reported improved worker productivity, whilst 13.3% reported better decision-making and 11.9% saw gains in innovation.

However, most firms have yet to adopt AI. MOM said 71.5% of firms have not adopted the technology, whilst 28.5% have started. Among adopters, only 3.8% are integrating AI into core processes, with most still at the planning or piloting stage.

Adoption is also uneven across firm sizes. AI adoption rises from 23.9% among firms with fewer than 25 employees to 76.4% among larger firms, with firms of more than 500 employees showing deeper integration.

Digitally intensive sectors are leading adoption. Information and communications had the highest AI adoption rate at 74.1%, followed by professional services at 57.5%, and financial and insurance services at 56.4%.

The report found no indication of widespread job displacement. Only 6.2% of firms reported reduced headcount after adopting AI, whilst 18.9% redesigned roles and 13.9% created new AI-related jobs.

Still, barriers remain. The most common constraints were high implementation costs at 44.9% and lack of in-house expertise at 42.4%. Smaller firms also cited a lack of strategy and low trust in AI, whilst larger firms faced integration complexity and data security concerns.

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