Import and Export Basics in Singapore

It is a well-known fact that Singapore is one of the leading importers and exporters in the region, thanks to our business-friendly regulations and environment. Singapore’s trade procedures are relatively simple, making obtaining permits and much-needed licences a painless process. 

This contributed to the total value of exports amounting to more than USD$390 million while its import value emerged at nearly USD$359million. Singapore exports more than 4,300 products to 220 countries yearly. 

Which country does Singapore trade most with? There are no surprises to the following list:

1. China
2. Hong Kong, China
3. Malaysia
4. The United States
5. Indonesia

Due to Singapore's efficient trading hubs, it has established solid alliances with those who have plied the shipping routes between Asia and Europe while providing feeder networks with smaller regional ports. 

On top of that, Singapore is home to thousands of local and international supply chain and logistics businesses, establishing it as one of the largest trading hubs in the world. 

If you are looking to start your own trading business in Singapore, here are the basics.

1 - Register Your Company with the Accounting & Corporate Regulatory Authority of Singapore

Of course, the first step is to register your import-export company with the Accounting and Corporate Regulatory Authority of Singapore (ACRA) before you start. 

Thankfully, this can be quite a seamless process. 

First of all, you can do this completely online with BizFile+, a site accessed by ACRA. BizFIle+ was launched in 2016 as an upgrade to its predecessor, BizFile in its effort to be more efficient and provide faster service. You can access BizFile + through the ACRA portal. With more than 400 online services to the public, you can electronically submit statutory documents and their source information. To date, BizFile + processes well over a million transactions annually. 

Many small businesses in Singapore start off with a business loan and Singapore has an exceptional track record of helping startups launch their projects with necessary funding.The reasonable rate and instant cash helps you expand your business pretty quickly. INFT also offers such competitive funding facilities if you are looking for business capital injection. 

With BizFile+, you can:

1. Register a local, foreign, LLP, or a Public Accountant firm electronically
2. Register a foreign business’ branch office in Singapore
3. Regulate and maintain your commercial transactions as well as look up information about a registered form online
4. Conduct online checks when seeking approval from other referral authorities
5. Find alternative payment methods with a user-friendly web interface
6. Check on the status of transactions
7. Receive email or SMS message alerts when your transactions are completed
8. File an annual return for the year
9. Inform ACRA about changes in your business name change, a corporate entity like your company’s registered address, company structure, business operations, and particulars of officers, directors, and members
10. Update members and/or officers’ details

2 - Activate Your Business Account with the Customs of Singapore

For an import-export company, it is compulsory to activate your business account with Singaporean Customs before your company can engage in any trading activities. But worry not, if you’ve got all the requirements ironed out, it would usually take no more than 2 working days to have it sorted out. 

Once your business is approved, you will acquire an approval letter that has an expiry date. After which, a renewal is required. 

Once activated, you may want to start looking into securing a business term loan or working capital injection to ensure that you have enough funds to keep the business going for a longer period of time. Startup loans are very common in this new-norm business environment. 

3 - IN and OUT Permit

Most trading businesses in the supply chain acquire an IN Permit and OUT Permit so that they can trade all goods, including non-controlled and controlled items easily. These permits are compulsory except for when you’re trading uncontrolled goods of the value of SGD$400 or less.

An IN Permit allows you to import goods of all kinds into Singapore. While an OUT Permit allows you to export all goods to other countries. 

Controlled goods include, but not limited to, food and animal products, drugs, tobacco products, cigarettes, petrochemicals, arms and explosives (including bullet-proof apparel, and toy guns), films, videos, video games, pharmaceutical products, telecommunication, and radio communication equipment. 

To trade these goods, you are subject to the regulations set by the Controlling Agencies and the Singapore Customs. You will need to find out more about the protocols and documentation if you’re trading food and animal products, petrochemicals, drugs, tobacco and cigarettes, and high-technology devices. 

4 - Exercise Duties, Customs, Services, and Goods Taxes

Customs duty is levied on imported goods into Singapore while Excise duty is levied on goods that are manufactured in or imported into the country. If you’re trading in products like tobacco products, liquors, petroleum products, and materials related to the motor industry, duties may be imposed at a specific rate or an ad valorem.

In such cases, you, as a trading company, may need to keep your eyes on the different custom schemes and taxes.  

Imported goods into Singapore will be charged a Goods Tax of 7% which is administered by the Singapore Inland Revenue Authority and collected by Customs. The tax is usually determined from the point of freight, insurance, and cost, along with all other costs involved in bringing the products across Singapore borders. 

Supply Chain Financing and Import & Export Loans

Most trading companies start up small but worry not, many banks and financial institutions place significant importance on supporting small and medium trading companies in Singapore. A side note: stay away from unincorporated money lending companies because their fees may be much higher than regulated companies. 

Trading companies, large and small alike, face challenges like having a firm understanding the ever-changing market demands, recording and tracking of inventory, strong competition, regulatory changes, sourcing for products, price wars, control over overheads and resources, coordination within departments, and many more. 

Due to these challenges, it may affect the bottom line of a trading company that does not have a healthy cash flow. Supply chain financing has been on the rise of late because of the pandemic. The financial challenges like warehousing and distribution, managing supply and demand, innovation in supply chain development, logistics, eCommerce solutions and digitising a business, team management, cargo clearance, and many more. 

Luckily, in Singapore, there are many different types of small business loans offered. 

1. Invoice Factoring and Invoice Financing - The key to invoice factoring is simple - to get you cash fast, moving you past payment terms. Under some invoice factoring or invoice discounting systems, it even incentivises you and helps you and your suppliers and fellow traders pump money into the entire process. Financial institutions offer instant payments against outstanding invoices for a fee. The charges vary between the bank or financial institution you sign up with. 
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2. Overdraft - An overdraft is a line of credit offered by your bank that is often attached to your business bank account. Based on what your bank has agreed to provide you with, it can be drawn any time. It is extremely helpful for businesses that need urgent financial help with day-to-day expenses but it can be expensive. The good thing about an overdraft is that you pay only for what you overdraw.
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3. Term Loans - The purpose of a business term loan is to help businesses make large purchases with the provision of monthly repayments with interest. The good thing about a business term loan is that it spreads the impact of the purchase(s) into smaller, more manageable chunks. It is the kind of financial aid that is often used on a periodic basis. If you get the business term loan with reasonable terms, you’ll enjoy lower interest rates compared to other forms of loans with longer repayment periods, flexibility if your credit score is good. Of course, without a smidgen of doubt, a business term loan frees up your cash flow. 

Before You Go…

INFT offers a vast array of financial services with our top-notch free digital business account. You can create and send invoices online easily on our platform and receive and send money from and to anyone in the world. Interactive reporting can be viewed in one transparent dashboard which gives you a real-time overview of all transactions in your account. 

You can create your own free business account right here. 

If you wish to find out more about using our services or apply for business financing, call us now at (+65) 6635 5668 or email us at cs@inft.co.