Import-Export Business In Singapore

In recent decades, Singapore has firmly established itself as a pivotal hub for international trade, bridging the gap between the Western and Eastern markets. With over 3,000 local and international supply chain and logistics companies operating within its borders, Singapore stands out as one of the world’s largest merchandise centres. The country’s dedication to infrastructural development, including harbours, airports, shipping lines, and roadways, has further enhanced its reputation as a premier trading destination. This comprehensive guide will provide you with the essential steps and information required to kickstart a successful import-export business in Singapore.

Why Singapore is a Key Trading Centre?

There are several compelling reasons behind Singapore’s ascendancy as a key trading centre:

• Strategic Location: Singapore’s central location in Southeast Asia makes it an ideal hub for international trade.
• Ease of Doing Business: The government’s commitment to reducing red tape and bureaucracy streamlines the process of starting a business.
• Political Stability: Singapore’s stable government promotes a safe environment for corporate operations.
• Superior Infrastructure: The nation has invested heavily in top-notch infrastructure, including world-class ports, airports, and logistics facilities.

These features have attracted about 70% of the world’s major commodity trading corporations, including Vitol, Wilmar International, and Golden Agri-Resources, which earn more than US$1 trillion in yearly revenue from their Singapore operations.

Forming an Import-Export Business in Singapore

If you’re wondering how to start an import-export business, the first step is to establish your company in Singapore. Singapore’s corporate entities are supervised by the Accounting and Corporate Regulatory Authority (ACRA). A private limited corporation is the best structure for a trading business. Foreigners can easily set up a company in Singapore by collaborating with a local corporate services provider like OnDemand International.

The key requirements for registering a private limited company in Singapore include

• Paid-Up Capital: The bare minimum paid-up capital is S$1, but maybe later be raised.
• Director: At least 1 Singapore Resident Director is required for every firm.
• Registered Address: A local registered address is mandatory.
• Shareholders: A company’s shareholders might range from one to fifty, and they can be either local or international people or corporate organisations.
• Company Name: The chosen name must be approved before the registration process begins.

Your firm will acquire a unique entity number (UEN) upon establishment, which is a standard and unique identifying number that simplifies intra-agency communication and integration.

Necessary Permits and Licenses for Operating Import-Export Business in Singapore

Securing the requisite licenses is the next crucial step when operating an import-export business in Singapore which also entails being a freight forwarder. Singapore’s specific licensing requirements may differ from those of other countries, necessitating thorough research when applying for export and import licenses.

Import or Export All Goods

For businesses intending to import or export all goods, including both non-controlled and controlled items, an IN Permit is obligatory for imports, while an OUT Permit is required for exports. In certain scenarios, such as the export or import of trade samples valued at no more than S$400, permits may be exempted.

Export Local Goods

When exporting local products, some buyers may request a Certificate of Origin, confirming the goods’ Singaporean origin. Two types of Certificates of Origin are available: Ordinary, which certifies that the exported goods are entirely Singaporean-made, and Preferential, which allows buyers to enjoy tax benefits.

Import or Export Controlled Goods

Food and livestock products, petrochemicals, medicines, and tobacco are all widely traded in Singapore. These items are subject to the regulations of controlling agencies. In most instances, an OUT or IN Permit must be obtained before proceeding with their import or export.

Import High-Technology Items

Certain high-technology devices are subject to strict export regulations, with Singaporean importers often required to furnish a Delivery Verification and Certificate of Import from the exporter. These permits can be obtained through Singapore Customs and are essential for items governed by these regulations.

Trade Insurance for Singapore Trading Business

While not mandatory, obtaining insurance for your Singapore Trading business is a prudent move, particularly to mitigate risks associated with lost goods, damage, or non-payment from buyers. Various types of insurance can safeguard your operations:

• Trade Credit Insurance: Protects your company from non-payment risks in both commercial and non-commercial activities.
• Marine Insurance: Covers goods throughout their journey, whether by sea, land, or air.
• Political Risk Insurance: Crucial for countries with volatile political environments, it safeguards against risks like confiscated goods and riots.
• International Trade Insurance: Also known as International Product Liability Insurance, this covers exports rejected by the importing country due to policy changes.

Financial Assistance for Import-Export Business in Singapore

Here are some of the options available for financial assistance for your trading business in Singapore. They are listed below:

• Corporate Bank Accounts for Your Singapore Import-Export Business: Opening a corporate account with a local bank is a crucial step for your import-export company. It ensures timely payments, access to world-class banking services, and secure fund management.
• Singapore offers a multitude of options for opening a corporate account, with trusted partner banks such as DBS Bank, OCBC Bank, UOB, Standard Chartered, Citibank, and HSBC, making the process seamless.
• Global Trader Programme for Import-Export Businesses: The Global Trader Programme (GTP) provides considerable tax benefits to import-export businesses. It offers a 5% or 10% company tax rate on eligible trade revenue for 3 or 5 years. This includes income from physical trading, brokering, and derivative trading.
• Business Loans: Most banks in Singapore offer various business loans, including unsecured business term loans, SME micro-loans, and SME working capital loans, to support your financial needs.
• Trade Credit Insurance Scheme (TCIS): TCI is an insurance policy that protects your company from buyer nonpayment. With appropriate qualifying requirements, the government can cover up to 50% of the minimum insurance premium for TCI plans sold by Singapore-registered credit insurers.
• Letter of Credit: The use of letters of credit (LC) is common in Singapore. This banking service guarantees timely payment from the buyer to the seller, eliminating the risk of non-payment against delivery.

If your import-export business qualifies, you can enjoy these financial benefits.

Loans Provided For Import-Export Business in Singapore

There are different types of loans provided for import-export business in Singapore is

• Overdraft: Banks may enable you to overdraw your current account up to a certain limit. Only interest on the amount overdrawn is due.
• Transaction Loans: These loans are designed to finance confirmed orders, contingent on the creditworthiness of the ordering business.
• Term Loans: Issuing banks make term loans when corporations submit collateral, requiring authorization.
• Factoring Loans: Factoring agents, which include financial institutions and banks, provide immediate payments on overdue bills. They typically charge a fee of up to 15% for collecting payments from clients.