Understanding the New PSG Funding Cap for AI Devices in Singapore

Singapore's Budget 2025 has introduced significant changes to the Productivity Solutions Grant (PSG) scheme, with a new funding cap specifically designed for AI devices and solutions. This development marks a pivotal shift in how the government supports the adoption of artificial intelligence technologies across businesses and educational institutions in Singapore.

As AI continues to transform industries and learning environments, the revised PSG framework aims to democratize access to cutting-edge AI tools while ensuring responsible allocation of resources. For organizations looking to enhance productivity through AI integration, understanding these new parameters is essential for strategic planning and implementation.

In this comprehensive guide, we'll explore the details of the new PSG funding cap for AI devices, eligibility requirements, application procedures, and the potential impact on various sectors. Whether you're a small business owner, an educational administrator, or an AI technology provider like us at AIPILOT, this article will equip you with valuable insights into navigating Singapore's evolving AI funding landscape.

What is the Productivity Solutions Grant (PSG)?

The Productivity Solutions Grant (PSG) has been a cornerstone of Singapore's digital transformation strategy since its introduction in 2018. Administered by Enterprise Singapore, this grant was designed to help businesses adopt pre-approved digital solutions and equipment to enhance their operations and boost productivity.

At its core, the PSG aims to address a fundamental challenge many Singaporean businesses face: the initial cost barrier to adopting new technologies. By subsidizing a significant portion of the cost, the government has been encouraging SMEs (Small and Medium Enterprises) to embrace digital tools that might otherwise remain out of reach.

Prior to Budget 2025, the PSG typically covered up to 50-70% of qualifying costs, depending on the specific solution and sector. The grant has supported various categories of solutions, from basic digital tools like accounting software to more advanced technologies such as customer relationship management systems and, more recently, AI-powered solutions.

What makes the PSG particularly accessible is its straightforward approach. Businesses can simply choose from a list of pre-approved vendors and solutions, significantly reducing the research burden and ensuring quality standards. This pre-approval system has also helped create a transparent marketplace for technology providers, fostering healthy competition and innovation.

The New Funding Cap for AI Devices Explained

Budget 2025 has introduced a specialized funding cap specifically for AI devices and solutions within the PSG framework. This targeted approach represents the government's recognition of AI as a category deserving special attention and investment.

Under the new structure, eligible AI devices now have a dedicated funding cap of S$30,000 per applicant, separate from the general PSG funding pool. This means businesses can access support for AI technologies without depleting their allocation for other digital transformation initiatives.

The subsidy rate for AI devices has been set at 50% of qualifying costs for most businesses, with special provisions allowing up to 70% for eligible SMEs in priority sectors such as healthcare, education, and manufacturing. This tiered approach ensures that sectors with the most to gain from AI adoption receive enhanced support.

What's particularly noteworthy about the new framework is its expanded definition of AI devices. The category now encompasses:

• Hardware with embedded AI capabilities (such as smart cameras with computer vision)
• AI-powered educational tools and robots
• Natural language processing devices
• Specialized AI computing hardware
• AI-enabled productivity and analysis tools

This broader categorization reflects the diverse landscape of AI technologies and opens doors for various innovative solutions to receive government backing. For companies like AIPILOT that specialize in AI-powered educational tools and language learning solutions, this represents a significant opportunity to make our offerings more accessible to Singaporean organizations.

Eligibility Criteria for PSG Funding

To access the new AI device funding under the PSG, organizations must meet several eligibility requirements. Understanding these criteria is essential for a successful application:

Business Eligibility

For a business to qualify for the PSG AI devices funding, it must:

• Be registered and operating in Singapore
• Have a minimum of 30% local shareholding
• Have an annual sales turnover of less than S$100 million OR employ fewer than 200 workers
• Purchase/lease/subscribe to the IT solution or equipment for use in Singapore

Educational institutions have slightly different criteria, requiring them to be registered with the Ministry of Education or be part of government-recognized educational frameworks.

Solution Eligibility

Not all AI devices automatically qualify for funding. To be eligible, the solution must:

• Be on the pre-approved list of AI solutions maintained by Enterprise Singapore
• Demonstrate clear AI capabilities that enhance productivity or learning outcomes
• Meet security and data protection standards set by the government
• Be provided by an approved vendor who meets service quality requirements

The pre-approved list is regularly updated, with new solutions added as they meet the required standards. This dynamic approach ensures that the funding remains relevant as AI technology evolves.

Usage Requirements

Beyond meeting the basic eligibility criteria, organizations must also commit to:

• Implementing the AI solution within 6 months of approval
• Providing data on usage and outcomes for at least 12 months post-implementation
• Participating in case studies if requested (particularly for novel applications)
• Ensuring staff receive appropriate training to maximize the solution's benefits

These usage requirements reflect the government's focus on actual implementation and impact rather than mere acquisition of technology.

How to Apply for PSG Funding

The application process for the new AI devices funding cap follows a streamlined approach designed to minimize bureaucracy while ensuring proper assessment. Here's a step-by-step guide to navigating the process:

1. Identify Your Needs and Pre-approved Solutions

Begin by assessing your organization's specific needs and identifying which AI solutions would address them effectively. Then, check the Business Grants Portal (BGP) or GoBusiness Gov Assist to view the list of pre-approved AI devices and vendors. This crucial first step ensures you don't waste time pursuing funding for ineligible solutions.

2. Contact Vendors for Quotations

Once you've identified suitable pre-approved solutions, reach out to the vendors for detailed quotations and product information. Reputable vendors like AIPILOT are familiar with the PSG requirements and can provide PSG-compliant quotations that clearly separate eligible and non-eligible costs.

3. Submit Your Application

With quotations in hand, submit your application through the Business Grants Portal. You'll need to:

1. Create or log in to your BGP account using your CorpPass credentials
2. Select the PSG and navigate to the AI devices category
3. Complete the application form with details about your organization and the intended use of the AI solution
4. Upload supporting documents, including the vendor quotation and any required financial statements
5. Submit the application and note your reference number

4. Application Review and Approval

The evaluation process typically takes 3-4 weeks, during which Enterprise Singapore assesses your application against the eligibility criteria and funding priorities. If clarification is needed, you may receive queries through the BGP messaging system.

Applications are evaluated not just on eligibility but also on the potential impact of the AI solution on your organization's productivity, innovation capacity, and alignment with industry transformation maps.

5. Implementation and Claim Submission

Once approved, you'll receive a Letter of Offer (LOO) outlining the terms and conditions of the grant. After accepting the LOO, you can proceed with purchasing and implementing the AI solution.

The final step is submitting a claim for reimbursement, which requires:

• Proof of purchase (invoice and receipt)
• Proof of payment (bank statement)
• Photographs or documentation showing the implemented solution
• An implementation report describing how the solution has been deployed

Claims must be submitted within 6 months of the project completion date specified in your application.

AI Devices Covered Under the New Framework

The Budget 2025 PSG framework adopts an inclusive approach to AI devices, recognizing the diverse ways artificial intelligence can enhance productivity and learning. Here's a closer look at the categories of AI devices now eligible for funding:

Educational AI Solutions

Educational institutions and training providers can now access funding for a range of AI-powered learning tools, including:

• AI Language Learning Systems: Solutions like TalkiCardo AI Chat Cards that provide interactive language practice through AI-powered conversation partners
• AI Teaching Assistants: Virtual assistants that can answer student questions, grade assignments, and provide personalized feedback
• Educational Robots: AI-powered robots designed to facilitate learning through interactive activities and personalized guidance
• Smart Assessment Tools: AI systems that analyze student work and provide detailed insights on learning progress and areas for improvement

These educational solutions are particularly relevant in Singapore's knowledge-based economy, where language skills and lifelong learning are critical success factors.

Business Productivity AI Tools

For businesses seeking to enhance productivity, eligible AI solutions include:

• AI Translation Devices: Real-time translation tools that facilitate communication in multicultural business environments
• Document Processing Systems: AI-powered tools that can extract, categorize, and analyze information from documents
• Customer Service AI: Virtual assistants and chatbots that can handle routine customer inquiries
• Analytical AI Solutions: Tools that process business data to identify patterns, predict trends, and recommend actions

These solutions address key productivity challenges faced by Singaporean businesses, particularly SMEs with limited resources for manual processing tasks.

Specialized Industry AI Applications

The new framework also recognizes industry-specific AI applications:

• Healthcare Diagnostic Tools: AI systems that assist in medical image analysis or patient monitoring
• Manufacturing Quality Control: Computer vision systems that detect defects or anomalies in production
• Retail Customer Analysis: AI tools that analyze customer behavior and preferences to optimize merchandising
• Financial Risk Assessment: AI systems that evaluate credit risk or detect fraudulent transactions

These specialized applications demonstrate how AI can be tailored to address industry-specific challenges and opportunities.

Impact on Singaporean Businesses

The introduction of a dedicated funding cap for AI devices in Budget 2025 represents a significant opportunity for Singaporean businesses across various sectors. Here's how different types of organizations stand to benefit:

For Small and Medium Enterprises (SMEs)

For SMEs, which often face resource constraints when adopting new technologies, the dedicated AI funding cap offers several advantages:

Lowered Financial Barriers: With up to 70% subsidy for qualifying costs, SMEs can now access sophisticated AI tools that would otherwise be prohibitively expensive. This democratization of AI technology helps level the playing field between smaller firms and their larger competitors.

Productivity Multiplication: AI tools can help SMEs achieve more with limited human resources. For instance, a small marketing team can leverage AI content analysis to handle tasks that would typically require multiple specialists, allowing them to focus on strategy and creative work.

Accelerated Digital Transformation: Many SMEs have been hesitant to embrace AI due to perceived complexity and cost. The new funding structure provides not just financial support but also a curated list of pre-approved solutions, simplifying the selection process and reducing implementation risks.

For Larger Enterprises

While the PSG is primarily targeted at SMEs, larger organizations that meet the eligibility criteria can also benefit:

Departmental Innovation: The funding cap can support experimental AI implementations within specific departments or for particular use cases, allowing for controlled testing before wider deployment.

Training and Upskilling: Many approved AI solutions include training components, helping larger organizations build internal capabilities around AI technologies and ensuring staff can effectively leverage these new tools.

Vendor Ecosystem Development: As more organizations adopt AI solutions through the PSG, the ecosystem of vendors and support services will grow, benefiting all market participants through increased competition and innovation.

Real-World Business Applications

The practical applications of PSG-funded AI devices span across business functions:

Customer Service: AI-powered chatbots and virtual assistants can handle routine inquiries 24/7, freeing human agents to focus on complex cases while improving response times and customer satisfaction.

Operations: AI process optimization tools can identify inefficiencies in workflows, recommend improvements, and even automate routine decision-making, leading to significant cost savings and productivity gains.

Marketing and Sales: AI analytics can help businesses understand customer behavior, optimize marketing campaigns, and personalize customer interactions, leading to improved conversion rates and customer retention.

Human Resources: AI recruitment tools can screen resumes, conduct initial candidate assessments, and even help with employee development planning, making HR processes more efficient and effective.

Implications for Educational Institutions

The dedicated AI funding cap holds particular promise for Singapore's education sector, which has been increasingly focused on preparing students for a technology-driven future. Educational institutions of all levels can leverage this funding to enhance teaching and learning experiences:

Transforming Language Learning

Language acquisition is a critical focus in Singapore's education system, and AI-powered language learning tools offer tremendous potential for enhancement:

Personalized Practice: Solutions like AIPILOT's AI language learning systems provide students with personalized conversation partners that adapt to their proficiency level and learning pace. Unlike traditional methods that offer limited practice opportunities, these AI tools are available 24/7 and provide immediate feedback.

Pronunciation and Fluency: AI speech recognition can analyze student pronunciation with remarkable precision, offering specific guidance on how to improve particular sounds or intonation patterns. This level of detailed feedback would be impossible for a single teacher to provide to every student in a class.

Cultural Context: Advanced AI language tools can simulate conversations in culturally authentic contexts, helping students understand not just vocabulary and grammar but also cultural nuances and pragmatics.

Supporting Teachers and Administrators

Beyond direct student applications, AI tools can support educators and administrative staff:

Administrative Automation: AI can handle routine administrative tasks such as scheduling, document processing, and basic student inquiries, allowing staff to focus on higher-value activities that require human judgment and empathy.

Assessment Support: AI-powered grading tools can provide first-pass evaluation of objective assessments and even offer feedback on written work, helping teachers focus their attention on areas where human insight is most valuable.

Learning Analytics: AI systems can analyze student performance data to identify patterns, flag students who may need additional support, and help teachers understand which teaching methods are most effective for different learning styles.

Preparing Students for an AI-Enabled Future

Perhaps most importantly, introducing AI tools in educational settings helps prepare students for a future where AI will be ubiquitous in workplaces:

AI Literacy: Hands-on experience with AI tools helps students develop an understanding of AI capabilities and limitations—essential knowledge for future careers across virtually all sectors.

Collaboration with AI: Students learn to work alongside AI tools as enhancers of human capability rather than replacements, developing skills in prompt engineering, output evaluation, and effective human-AI collaboration.

Ethical Considerations: Exposure to AI in educational contexts creates opportunities for discussions about AI ethics, data privacy, and responsible technology use—crucial topics for future citizens.

Future Outlook and Additional Support Measures

The dedicated PSG funding cap for AI devices represents just one component of Singapore's broader strategy to position itself as a global AI hub. Looking beyond Budget 2025, several trends and additional support measures are likely to shape the AI landscape in Singapore:

Evolving Funding Frameworks

The PSG AI funding cap is expected to evolve based on market response and technological developments:

Expanding Eligible Categories: As new AI applications emerge, the list of pre-approved solutions will likely expand to include novel use cases and technologies. This dynamic approach ensures the funding remains relevant as AI capabilities grow.

Integration with Other Support Schemes: Future iterations may see closer integration between the PSG and other government initiatives such as the Enterprise Development Grant (EDG) and the SkillsFuture Enterprise Credit (SFEC), creating a more comprehensive support ecosystem.

Tiered Support Structures: We may see the development of more nuanced funding tiers based on organization size, sector priorities, or the sophistication of AI solutions being implemented.

Complementary Support Measures

Financial support through the PSG is being complemented by other initiatives:

AI Skills Development: The SkillsFuture program is expanding its AI-related courses and certifications, helping to build human capital alongside technological adoption. This dual approach ensures organizations have both the tools and the talent to leverage AI effectively.

AI Innovation Hubs: The establishment of dedicated AI innovation centers provides physical spaces where businesses can experiment with AI technologies, connect with solution providers, and access specialized expertise.

Regulatory Sandboxes: For more experimental AI applications, regulatory sandboxes allow organizations to test innovative approaches with temporary exemptions from certain regulatory requirements, encouraging responsible innovation.

Long-term Vision

Singapore's investment in AI adoption through measures like the PSG funding cap aligns with its long-term strategic vision:

Economic Transformation: By democratizing access to AI technologies, Singapore aims to accelerate the transition to a more productive, innovation-driven economy less dependent on labor inputs.

Talent Development: As more organizations adopt AI solutions, demand for AI-related skills will grow, creating incentives for workforce development and specialization in high-value AI roles.

Regional Leadership: By fostering early and widespread AI adoption, Singapore is positioning itself as a regional leader in AI implementation and expertise, creating opportunities for knowledge export and service provision to neighboring markets.

Conclusion

The introduction of a dedicated PSG funding cap for AI devices in Budget 2025 marks a significant milestone in Singapore's AI adoption journey. By allocating specific resources to this transformative technology, the government has signaled its commitment to ensuring Singaporean organizations remain competitive in an increasingly AI-driven global economy.

For businesses and educational institutions, the new funding framework represents an unprecedented opportunity to access sophisticated AI solutions at a fraction of the usual cost. From AI-powered language learning tools to productivity-enhancing business applications, the range of eligible solutions can address diverse organizational needs while building capabilities for future growth.

As AI continues to evolve, so too will the support mechanisms designed to facilitate its adoption. Organizations that take advantage of the current funding opportunity will not only benefit from immediate productivity gains but will also position themselves advantageously for future developments in the AI landscape.

The key to success lies in strategic implementation—selecting the right AI solutions that align with organizational goals, ensuring proper integration with existing systems and processes, and providing adequate training to maximize the benefits of these powerful new tools.

By leveraging the PSG funding cap alongside other available support measures, forward-thinking organizations can embark on a transformative AI journey that enhances capabilities, improves outcomes, and creates new possibilities for innovation and growth.