Dominant Themes for 2025: Geopolitics, AI and ESG

The past year has been marked by a complex geopolitical climate – wars, such as the conflict in Ukraine and tensions in the Middle East and East Asia, rising nationalistic sentiments influencing domestic and foreign policies. Despite these divisions, global efforts to address shared challenges – such as climate change and digital governance – have progressed, with new alliances emerging. Economic recovery from lingering post-pandemic disruptions gained momentum, with a focus on green technology and digital transformation.

At home in Singapore, 2024 has been a year of political renewal with significant changes in the government. One key focus in 2024 was the advancement of Singapore's Green Plan 2030, with strides in renewable energy, green building initiatives, and urban biodiversity. Singapore continued to lead the way in digital transformation, promoting artificial intelligence (“AI”) integration, fintech innovation, and smart city technologies.

For 2025, we expect the global geopolitical landscape to remain uncertain, with nations looking inwards, focusing on domestic priorities. ?But at the same time, we see new opportunities as the world continues to embrace AI and respond to meet the challenges brought by climate change. Singapore is undoubtedly connected to the global landscape. Staying attuned to emerging global trends will position us to take advantage of what lies ahead. In this Helmsman 2025 Singapore Outlook, we explore three themes.

Geopolitics and trade

US President Donald Trump outlined several key policy initiatives in the lead up to taking office. Of these initiatives is his “America First” policy which promises to implement sweeping tariffs on US imported goods, aiming to bolster US domestic production and reduce trade deficit. Trump is expected to hit China with tariffs of at least 10% above existing tariffs and it is anticipated that China will react to US tariffs with retaliatory measures. While China has yet to identify specific target goods, it is likely such measures will hit politically sensitive exports, including raw materials critical to the US tech industry such as cobalt and lithium.

The precise contours of Trump’s threatened tariffs remain to be seen. However, from past experiences, the tariffs are likely to not only target goods originating from China but also goods produced outside of China by Chinese-owned or state-linked enterprises. This shift from country-of-origin measures to ownership-based measures may mean that businesses will be under pressure to conduct more extensive due diligence before committing to deals and navigate a more complex regulatory environment.

In addition, we expect sanctions to continue to reshape the global economic landscape. New sanctions programmes may be developed, which may in turn be met with counter-sanctions regimes. Existing sanctions may be lifted. As it is, the early weeks of 2025 have already seen fresh US sanctions placed on Russia. Elsewhere, the fall of the Assad regime has brought calls to reconsider existing sanctions imposed on Syria.

Businesses may need to enhance due diligence efforts and navigate potentially conflicting regulatory frameworks. Businesses would also need to proactively assess contractual risk allocation, consider potential impediments or disruptions in supply chains and operations, and examine issues of contractual enforceability. We expect existing sanctions clauses to continue to be tested for fitness for purpose, and new ones to be drafted to meet the latest regulations.

Technology, cryptocurrencies and AI

On another frontier, Trump is anticipated to usher in an era of softer crypto policies and regulation. Market sentiment has been positive. Following the announcement of Trump’s Securities and Exchange Commission pick for chair, bitcoin surged past the $100,000 milestone for the first time. A crypto economic boom would likely see greater investments on our shores, given Singapore’s status as a favoured jurisdiction for crypto companies. As Singapore seeks to keep pace with industry, domestic regulation is expected to evolve to secure Singapore’s competitive edge – bringing with it a rapidly changing regulatory environment for businesses to navigate.

Shifting focus to a related subject, there is no question of AI’s increasing prevalence in the workplace and our personal lives. The latest tech gadgets and applications often come with some form of AI implementation or are at least “built-for-AI”. This shift toward AI is anticipated to gain even more momentum as 2025 unfolds. On 12 July 2024, Regulation (EU) 2024/1689 (“EU AI Act”) was published in the EU Official Journal, promulgating into law a comprehensive AI regulatory framework for the 27 EU Member States. While the EU AI Act is designed to address AI activities primarily within the EU, it will also have extraterritorial application. Developers intending to introduce AI products into EU markets would have to navigate the EU AI Act. Further, as the world’s first comprehensive AI regulatory framework, the EU AI Act is likely to influence the development of regulation elsewhere, including Singapore. South Korea has already followed the EU’s lead, signing into law the AI Basic Act in December 2024. For now, Singapore has adopted a facilitative approach towards AI – in 2024, it released the Model Governance Framework for Generative AI to guide the use of generative AI without the force of law. It also released Project Moonshot, an evaluation test kit for large language models to aid developers and AI system owners to create and utilise AI safely. As Singapore looks to poise itself as a leader in AI, local businesses would have to potentially navigate the EU AI Act or other regulatory frameworks that draw from the EU AI Act.

Environmental, social and governance

At the 2024 UN Climate Conference (COP29), climate financing and carbon markets took centre stage. In the National Statement delivered by the Minister for Sustainability and the Environment, Singapore affirmed its commitment to mobilising private capital towards supporting Asia’s energy transition and highlighted ongoing efforts to develop a well-functioning and credible carbon market, including through the co-facilitation of the Paris Agreement Article 6 negotiations. Article 6 seeks to operationalise country-to-country trading and realise an international carbon crediting mechanism. Dovetailing the above commitments is the progressive raising of carbon taxes in Singapore from 2024 onwards. As Singapore moves into the future, climate change measures will become increasingly important to businesses operating within and out of Singapore. It also represents new opportunities for Singapore’s capital-intensive economy, and we anticipate businesses to be on the lookout for practical guidance on this emerging field.

We stand ready to help you capture the opportunities and navigate unchartered territory. To find out more, please feel free to contact us:

Maureen Poh: [email protected] (Shipping, Trade & Commodities)

Chen Zhida: [email protected] (Shipping, Trade & Commodities)

Una Khng: [email protected] (Commercial Disputes, IP & TMT)

Basil Lee: [email protected] ?(IP & TMT)

Matthew Teo: [email protected] (Employment)

Lynette Koh: [email protected] (Corporate, Banking and Finance, ESG)

Constance Leong: [email protected] (Corporate, Banking and Finance, ESG)