Investment in research and development will be raised to 3.5 per cent of GDP over the next five years.

Singapore's gross expenditure on R&D stood at 1.9 per cent of GDP in 1990 and grew to 2.8 per cent in 2008, and is on track to achieving 3 per cent this year.

The Government will sustain its commitment to public sector basic- and mission-oriented research at 1 per cent of GDP.

While the government will maintain public sector support for R&D, it will encourage private sector R&D to grow from 2 per cent of GDP currently to 2.5 per cent over the next five years.

The new Productivity and Innovation Credit scheme will provide significant incentive for companies to engage in R&D. It will provide a tax deduction of 250 per cent on the first $300,000 of R&D expenditures, and 150 per cent on the remaining R&D costs.

The Government, as a significant consumer of products and services, will itself play a larger role to help companies turn their R&D into marketable solutions.

Government will commit $450 million over five years to start a Public-Private Co-Innovation Partnership for government agencies to work with private sector companies in co-developing innovative solutions for medium- to long-term needs, in areas such as urban mobility, environmental sustainability and energy security.

Said Mr Howie Lau, General Manager, Lenovo ASEAN, "The multiple measures to encourage innovation and internationalization are bold, and just the shot in the arm that Singapore's enterprises and SMEs need.

"As global growth opportunities shift toward emerging markets, businesses will require greater use of technology to reach out to new markets and customize their approach to different geographies. Companies would do well to invest in such technologies and related skill-sets in preparation for the upturn."