Digitalisation for SMEs: From adoption to transformation
Government initiatives, change management and AI solutions are among the highlights from the panel discussion
[SINGAPORE] The Business Times Budget Roundtable 2025 delved into topics ranging from the challenges of adopting digital tools and leveraging artificial intelligence (AI) for businesses, to cybersecurity and support for small and medium-sized enterprises (SMEs).
These are edited excerpts from the discussion.
ROUNDTABLE PANELLISTS
- Low Yen Ling, senior minister of state for trade and industry
- Koren Wines, managing director, Xero Asia
- Beatrice Liu, co-founder and CEO, Oriental Remedies Group
Moderator: Anita Gabriel, deputy news editor, The Business Times
Anita Gabriel: What are the factors that set successful SMEs apart from those still stuck at the starting line, and how can more businesses leverage these initiatives to drive real transformation?
Low Yen Ling: I think it’s important to look at the global and macro environment. Looking back at 2024, it was generally a good year for Singapore’s economy. We registered gross domestic product growth of 4.4 per cent, higher than the 1.8 per cent in 2023, despite a volatile global economic climate. So even as there are challenges, there are also opportunities.
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The multilateral trading system is under stress, which has major implications for a small, open economy like Singapore’s. But we can take heart in a few positive factors.
We’re right in the heart of Asean, and in five years, Asean will be the fourth-largest economy in the world. That counts for something.
And as we look at global trade, if we come together as a nation – Singaporeans, SMEs and companies based here – we can position Singapore as an essential hub for new trade flows. There’s also potential in the repositioning of production and supply chains.
But that requires a whole-of-ecosystem effort – small companies, private sector, public sector all working together.
It’s important to remember how we got here. It’s not just one or two years of growth – it’s over 60 years of nation building. There are things we must continue to invest in.
One, our ecosystem and infrastructure, with long-term planning. Two, staying open – to talent, to innovation, and to trade. Three, continued investment in our people. It’s not just about front-loading education; it’s about lifelong learning.
“As we look at global trade, if we come together as a nation – Singaporeans, SMEs and companies based here – we can position Singapore as an essential hub for new trade flows. There’s also potential in the repositioning of production and supply chains.”
Low Yen Ling, senior minister of state for trade and industry
This is the context for why, at the Committee of Supply, the Ministry of Trade and Industry shared our strategies focused on four areas.
First, strengthening the connectivity of SMEs to the region and the world. Because of our small domestic market, we have to venture out. Second, growing our SMEs through innovation. Third, investing in people. Fourth, maintaining a strong, pro-business environment.
Gabriel: Beatrice, your company has embraced digitalisation meaningfully. What were some of the key challenges you faced that you have overcome?
Beatrice Liu: On challenges, there are many, and I asked a lot of my entrepreneur friends to ensure their voices are well-represented here.
One very common challenge is change management. We know we need to change, but we don’t know how to cascade it down the organisation. A second challenge is the lack of technical expertise. That is the support that we need.
Koren Wines: I think it’s super important, what you’re saying about change – to bring people into the organisation who are pro-change and understand that everything will keep evolving, and who are willing to go on that journey with you.
Building a change-ready organisation helps make change management smoother when the time comes.
Gabriel: How can SMEs assess whether their digital investments are truly creating value? And beyond just cost savings, what should they be looking for in terms of impact on growth?
Wines: There’s a reason that a business implements a digital tool. When we talk about going beyond cost savings, I want to point out that efficiency and productivity are really the only two levers businesses have to pull for survival.
Efficiency refers to cost savings, and productivity refers to revenue generation. At the end of the day, everything eventually leads to one of those two outcomes, because ultimately, businesses need to be profitable to survive.
So, pulling it back to a company’s pain point – why did you implement the software in the first place? Whether it’s cloud accounting for better financial visibility or making growth decisions like expanding, hiring or launching new products, every tool should address a specific problem.
“There’s a reason that a business implements a digital tool. When we talk about going beyond cost savings, I want to point out that efficiency and productivity are really the only two levers businesses have to pull for survival.”
Koren Wines, managing director, Xero Asia
Gabriel: As AI becomes more accessible, how is Singapore approaching this next wave of digitalisation? What’s being done to ensure businesses can adopt AI in a way that’s safe, ethical and aligned with their business goals?
Low: This is something we are actively working on, both in Singapore and internationally. We want to do our part in the international community.
In fact, as early as 2019, we developed what we call the Model AI Governance Framework. Shortly after, we also rolled out advisory guidance on how to deploy AI responsibly.
Last year, we updated the framework, and I’d like to share with everyone here something called the AI Verify Foundation. The Infocomm Media Development Authority is working very closely with more than 170 corporate partners in the ecosystem on this initiative.
It’s a community-driven effort to co-develop standards and safeguards – a pragmatic, substantive approach. We believe that a trusted, vibrant and innovative AI ecosystem doesn’t have to be mutually exclusive – it can, in fact, be mutually reinforcing.
As we learn more about AI, it allows us to better understand its implications – from experimentation to implementation, and the pathway for deploying various AI tools. We are also monitoring international developments, including the standards that may be set.
Gabriel: AI is moving from a nice-to-have to an essential. What does the next stage of AI adoption look like for SMEs, and how can they prepare for its impact on operations and decision-making?
Wines: You’re right – AI, especially generative AI, is almost table stakes these days, and the best way to prepare for what’s next is to start using what’s available now, to assist with your operations. Start there.
What we’re seeing on the horizon is incredibly exciting: agentic AI. I’m not sure if everyone is familiar with that term, so let me explain – and credit to someone else who described it brilliantly to me. If you think about someone famous, they typically have both an assistant and an agent. An assistant, like Siri or Alexa, responds reactively. You ask something, it replies or acts, but only when prompted. That’s what AI assistants do now.
But an agent, in contrast, is proactive. You give them an outcome – say, “keep wage costs under a certain percentage” – and they work in the background to achieve that outcome. They make decisions and go in different directions to get results, while keeping the human in the loop throughout. It’s outcome-focused, and proactive rather than reactive like an assistant.
This is not futuristic. This is in the next five years, literally just around the corner.
Another area that might sound futuristic is humanoid robotics, which is on the cusp at the moment. And when you combine agentic AI with humanoid robotics, which we’re increasingly seeing on platforms like LinkedIn and other social media, you get quite life-changing resources.
Of course, all of this must come with caveats and boundaries, and that’s where the Singapore government plays an important role. Whether it’s through the Enterprise Compute Initiative and all the other grants around the AI space, these are all focused on enabling businesses to move forward with these technologies.
There are always challenges with any technology. As I like to say, you can kill someone with a butter knife. Everything can be used for positive or negative purposes, and it’s absolutely essential to have guard rails, legislation – all those things must come into play.
That said, there’s a lot of opportunity – especially for marginalised populations, including women. When you look at what humanoid robots with agentic AI are capable of, they can really help relieve the burden of day-to-day tasks. In many households, women still carry the bulk of the load, and these kinds of technologies have the potential to be life-changing.
Gabriel: What’s the bare minimum SMEs should be doing when it comes to cybersecurity, and as they grow, how should security measures evolve to guard against threats such as data breaches and Personal Data Protection Act (PDPA) compliance?
Liu: I want to acknowledge that cybersecurity really adds a layer of stress and complexity for many small business owners like us. But I think we can also start small.
One of the very simple things we do, and this includes myself, is educating our team to use strong passwords with multi-factor authentication. That’s already a first layer of defence against hacking.
Beyond that, it’s about educating one another. We remind each other not to leave our laptops open, to always enable lock screens, and to be careful about what we upload onto free AI platforms. As Koren said earlier, everything can be used for good or bad – so I’m also very conscious about not putting confidential information into those platforms, in case of leaks.
Another important step is backing up critical information. What is your business continuity plan if something does happen? I think those are the core basics.
As the business scales, the challenge grows – especially with PDPA requirements and risks of data breaches. I’ve come to see risk management not as about perfectionism, but about identifying where the most important confidential information lies, and taking appropriate safeguards to protect that.
“As the business scales, the challenge grows – especially with PDPA requirements and risks of data breaches. I’ve come to see risk management not as about perfectionism, but about identifying where the most important confidential information lies, and taking appropriate safeguards to protect that.”
Beatrice Liu, co-founder and CEO, Oriental Remedies Group
Gabriel: To raise the bar, we need to constantly compare ourselves against the world and what they’re doing. How supportive is Singapore’s digital ecosystem for SMEs, and how does it compare internationally?
Wines: Xero has a presence in over 180 countries, and we work very closely with governments in each of our hubs around the globe. Singapore is the gold standard. Other countries look to Singapore.
You’re very humble in saying that Singapore can still learn from others – and of course, it is right for Singapore to look elsewhere – but when we look out, Singapore is leading the way when it comes to government support for businesses.
It focuses on outcomes, and on supporting businesses, not on internal government processes. In fact, it leads by example. Under the Smart Nation initiative, 99.9 per cent of government processes are already digitalised.
It’s not just about policy. The government collaborates. A lot of governments around the globe do not collaborate in the way that Singapore collaborates – interdepartmentally and between private and public as well.
So I started by saying Singapore is the gold standard, and I’ll end by saying that, too.
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