Given Singapore’s market dominance in the import/export trade, it has well-defined import/export procedures in place. Detailed below is an overview of the various aspects of trading in Singapore including opening a customs account, applying for licenses and permits, types of goods that can be imported/exported, taxes and fees, trade financing options, cargo clearance procedures, goods storage options, letter of credit, and etc.
Step 1: Incorporate a Company
For starting a trading business in Singapore, you will need to incorporate a company first. For detailed information on this, refer to Accounting and Corporate Regulatory Authority (ACRA) in Singapore.
Step 2: Register with Singapore Customs
All importers and exporters are required to activate their account with the Singapore Customs before they can import/export goods in and out of Singapore. Account activation is processed within 1-2 working days after submission of the application and you will be issued a Customs approval letter and is valid for as long as your company exists.
Step 3: Apply for Licences and Permits
You can engage a local freight forwarder to arrange the import and export for your items and they will handle the import/export licenses and permits, taxes and fees, cargo clearance procedures, and goods storage etc for you.
The followings summarized some of the basic information you should make known about.
Import/Export of all Goods
- For import of all goods (including controlled and non-controlled items) into Singapore, you are required to obtain an IN Permit through TradeNet before goods are imported into Singapore.
- For export of all goods (including controlled and non-controlled items) out of Singapore, you are required to obtain an OUT Permit through TradeNet.
Certain special scenarios such as importing/exporting trade samples of uncontrolled items of a total value not exceeding $400/- on the CIF – (Costs, Insurance, and Freight) value may be imported/exported without a permit.
Import/Export of Controlled Goods
The import/export of some goods are subject to the control of Controlling Agencies and are known as controlled goods. To import/export controlled goods you require a permit, in addition to the IN Permit and OUT Permit. You can submit the permit applications to the relevant Controlling Agencies through the TradeNet system or your freight forwarder or cargo agent for processing and approval. Examples of controlled goods include cigarettes and tobacco products, drugs, petrochemicals, animals and food products.
According to the Singapore Customs Department, a broad list of controlled goods includes the following:
- Animals, birds and their by-products.
- Endangered species of wildlife and their by-products.
- Meat and meat products.
- Fish and seafood products.
- Fruits and vegetables.
- Arms and explosives.
- Bullet-proof clothing.
- Toy guns, pistols, and revolvers.
- Weapons, spears, and swords.
- Films, video and video games.
- Publications and audio records.
- Telecommunication and Radio Communication Equipment.
Traders involved in the following must be licensed by SFA; For license application, you can refer to Licensing and Registration of Traders:
- import/export/transshipment of meat and fish products
- import/transshipment of fresh fruits and vegetables
- import/export/transshipment of processed *food products
- **and Food appliances
* Examples of processed food products including raw spices, raw or semi-processed food ingredients, flour, bottled water, liquors, wines, confectioneries, noodles and pasta, beverages, etc.
** Food appliances are used for containing food. Examples would be plastic bowls and porcelain cups.
Not sure whether your products are required to apply for an SFA license? You can contact SFA at Singapore Food Agency Headquarters for the labels of the products for confirmation always (which should include the name, manufacturer and ingredients details).
Besides, you will need to get acceptable regulated source documents from the importing country to certify the safety of these products. The examples of acceptable regulated source documents are as follows:
- Certificate of HACCP (Hazard Analysis Critical Control Point)
- Certificate of GMP (Good Manufacturing Practices)
- Health Certificate (issued by competent food or veterinary authority of exporting country)
- Attestation of export (issued by competent food or veterinary authority of exporting country)
- Factory license (issued by the regulatory authority of the exporting country)
For other certificates, you will require to get SFA prior approval via email.
If your food product does not fall under the SFA category, you are required to apply for an HSA license or any other applicable license.
For Import of High-Technology Items
Certain high-technology items are subject to export control by the exporting country and the Singapore importer may be asked to provide an Import Certificate and Delivery Verification (ICDV) by the exporter. Importers can apply for an ICDV from Singapore Customs. Items covered by an ICDV must be imported into Singapore directly, and are not to be diverted to other countries.
Export of Local Goods
Certain buyers may ask Singapore exporters for a Certificate of Origin (CO), which proves that your goods are made in Singapore. You can apply for a CO through TradeNet or via your freight forwarder or cargo agent.
In Singapore, businesses often resort to loans, letters of credit and insurance to cover the financial risks involved in trading. However, you will need at least 1 to 2 years of business track records in order to apply for trade financing.
Letter of Credit
Letter of Credit (LC) is the common practice in Singapore where payment to the exporter is guaranteed by the buyer’s bank. This is the preferred payment option both among exporters as well as buyers because the exporter’s payment is secured before the goods are shipped and likewise the buyer needs not make any payments until the goods are received. Types of different LCs are:
- Back To Back LC – If an exporter has to procure goods from another third party to fulfill the buyer’s order, he may open an LC with his bank based on the Original LC of the buyer.
- Usance LC – LC with a term also known as Deferred Payment Letter of Credit or Time LC or Term LC is a letter of credit payable at a predetermined time / future date after the conforming documents are presented. Commonly for a period between 30 to 60 days
- Sight LC – Payment to the seller is made when the conforming documents are submitted.
- Trust Receipt – An importer can get a loan from a bank based on the LC and the goods it promises he will be getting.
Most banks in Singapore have taken cognizance of the huge import/export industry and offer competitive trade finance services including import products, export products, and bank guarantees. Some of the financing options offered by banks are:
Business Overdraft – You can overdraw your current account up to a maximum amount agreed with the bank. Interest is paid only on what is overdrawn.
Revolving line of credit – You can arrange with a bank to have an agreed amount of funds made available to you at a fee. You can withdraw and top up the funds regularly.
Secured Term Loans – A loan made available against collateral subject to approval by the bank.
P.O. Financing – A loan made against the purchase orders raised to suppliers whereby the bank will pay your supplier on your behalf, giving you time to
Invoice Financing – Factoring agents like banks and financial institutions provide instant payment against your outstanding invoices. Collective fees of up to 15% per annum may be charged for collecting the payment from the clients depending on the financiers.
Trade Credit insurance provides companies with protection against the risk of non-payment by buyers arising from commercial and non-commercial risks. Should buyers default on payment further to the stipulated due date and grace period, the insurer will pay upon verifying the validity of the claim. Enterprise Singapore launched a government initiative that provides trade credit insurance at very attractive premium rates through its LIS Scheme.
Finnex Pte Ltd is the only consultancy that assist business owners to structure the most suitable financing the business requirements acting in your business best interest. We have negotiated more than tens of millions for countless SMEs in Singapore within our network of 47 Financiers.
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