AI adoption still stuck at the starting line for most firms in Singapore

Singapore may be betting big on artificial intelligence (AI), but most businesses are still on the sidelines. This is according to a new report by the Ministry of Manpower (MOM), which found that 71.5% of firms have yet to adopt AI. Among the 28.5% that have, only a small fraction have embedded it into core operations, suggesting adoption remains early and uneven.

The inaugural study, conducted by MOM’s Manpower Research and Statistics Department between January and March 2026, surveyed 2,560 private sector establishments employing about 486,600 workers.

Even among adopters, most firms are still testing the waters. Only 3.8% have fully integrated AI into core processes, while others remain in planning (7.4%) or pilot stages (6.0%). This points to a gap between awareness and execution, with firms showing interest in AI but struggling to scale it meaningfully.

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Singapore also trails other digitally competitive economies such as Denmark, Finland and Sweden in firm-level AI adoption, despite its strong digital readiness.

According to the report, AI adoption is far from equal across the business landscape. Larger firms are leading the charge, with adoption rates rising from 23.9% among companies with fewer than 25 employees to 76.4% among those with more than 500 employees. These organisations are more likely to have the infrastructure and internal capabilities needed to deploy AI at scale.

Sector-wise, uptake is highest in digitally intensive industries. Information and communications leads at 74.1%, followed by professional services (57.5%) and financial and insurance services (56.4%).

In contrast, more operationally heavy sectors such as retail (23.4%) and food and beverage (21.9%) lag behind, where physical tasks are less suited to automation.

For many firms, the barriers are less about intent and more about execution. The report noted that high implementation costs (44.9%) and lack of in-house expertise (42.4%) emerged as the biggest hurdles. Smaller firms also cited unclear strategy (32.4%) and low trust in AI (30.8%) as key challenges. Larger firms, meanwhile, face a different set of headaches, including integration complexity (56.1%) and data security concerns (55.4%).

Despite concerns around job losses, the report found little evidence of widespread displacement. Only 6.2% of firms reported reduced headcount due to AI. Instead, businesses are redesigning roles (18.9%) and creating new AI-related jobs (13.9%), signalling a shift towards task transformation rather than job elimination.

Higher-skilled roles, particularly those involving analytical and cognitive work, are seeing the biggest changes.

For firms that have adopted AI, the payoff is already visible. About 70.7% reported improvements in worker productivity, alongside gains in decision-making (13.3%) and innovation (11.9%). Some sectors also saw improvements in employee well-being and reduced stress levels.

Additionally, there are early signs that companies are gearing up for broader adoption. Smaller firms are focusing on foundational steps such as training (46.6%) and providing access to AI tools (41.1%). Larger firms are moving towards more structured approaches, including governance frameworks (37.5%) and workflow redesign.

This uneven adoption comes as AI usage in marketing accelerates globally, even as questions around transparency persist.

Research by the World Federation of Advertisers (WFA) found that 78% of multinationals are already using AI-generated or AI-enhanced content in consumer-facing campaigns, highlighting how quickly the technology has become embedded in marketing workflows.

However, clarity remains a sticking point. Eight in 10 brands are calling for clearer global guidance on AI disclosure, even as 67% have introduced internal policies. The tension, WFA noted, lies in balancing scale with scrutiny, with widespread use across product images (87%), marketing copy (80%) and background visuals (77%) still outpacing consensus on what consumers expect in terms of transparency.

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