Deloitte Report: Agentic and Physical AI Set for Rapid Growth in Singapore in the Next Two Years
The 2026 edition of the “State of AI in the Enterprise” report unveils significant trends in artificial intelligence (AI) within Singaporean businesses. It highlights a shift from trial phases to full-scale implementation, revealing that 32% of respondents have transitioned 40% or more of their AI pilots into production. This reflects a growing recognition of AI’s potential to enhance productivity and transform business models.
AI’s Impact on Productivity and Business Transformation
While AI is enhancing productivity for many organizations, only a fraction is using it to fundamentally transform their business processes. The report indicates that 28% of Singaporean companies are leveraging AI to reinvent core processes and business models, surpassing the global average of 17%.
Challenges remain, particularly in regulatory compliance and the need for AI skills. Notably, 27% of leaders cite regulations as a barrier, while 24% point to a lack of knowledge in AI technologies.
Agentic AI: A Rapidly Growing Trend
Agentic AI is expected to see significant growth, with 72% of businesses planning to deploy it across various operational areas within the next two years, a substantial increase from just 15% today. Key application areas include:
- Customer and support services – 24%
- Supply chain and logistics management – 15%
- Marketing and sales – top three areas
Despite the enthusiasm for agentic AI, only 14% of leaders report having a mature governance model, indicating a need for robust frameworks to manage the complexities of autonomous systems.
The Rise of Physical AI
Physical AI is gaining traction as 84% of Singaporean businesses anticipate its use in operations within the next two years, up from 53% today. Applications such as:
- Digital twins – 25%
- Collaborative robotics – 24%
- Intelligent security systems – 21%
These technologies promise a new wave of industrial automation, but companies must address public concerns regarding security and reliability.
Sovereign AI: A Strategic Consideration
The report underscores the importance of sovereign AI, with 77% of businesses emphasizing the need for data residency and in-country compute considerations in their strategic planning. Companies are increasingly aware of the risks associated with reliance on foreign-owned AI technologies.
To navigate these challenges, organizations should assess data and workloads that must remain within local boundaries, ensuring compliance with varying regulatory requirements.
Conclusion
The “State of AI in the Enterprise” report indicates that Singaporean businesses are on the cusp of significant AI-driven transformation. As they move beyond pilot programs to full implementation, the focus must shift towards developing coherent strategies that integrate AI into core business functions while addressing governance, compliance, and the need for skilled personnel.
