Starting a Trading Company in Singapore

If you are an entrepreneur looking forward to start a trading company, there is absolutely no better place for you to establish one than in Singapore. The country has in the recent years made tremendous strides in providing a conducive environment for people to set up their trading companies. The country has indeed proved to be a hot bed for economic vibrancy. With great ingenuity and innovation that the country has to offer, many trading companies have thrived immensely. The economic growth development potential of the country is on an upward trajectory and the future looks very promising for investors. 
 

Why Singapore?

The Singapore dollar has over the years gradually gained supremacy in the world markets. The huge diversity of the investment niches in the country is motivation enough for investors to start trading companies. The cost of doing business is by far very affordable for many investors with low taxes and has reduced significantly encouraging the booming of new trading companies. Availability of reliable energy, necessary infrastructure, skilled labor, a population with a high purchasing power and above all easy legal processes are some of the things that make Singapore the ideal destination for investing in a trading company. 

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The procedure

Perhaps the best part that investors love about investing in Singapore is the easy procedure that one has to adhere to. 

1) Requirements
The most fundamental procedure you should go through is incorporating a company. This is done by the Registry of Societies in Singapore once you have met the threshold required. If perhaps you are intending to import and export goods, the procedure provides that you must activate your account with the Singapore Customs. It takes closely 1 to 2 days in total to get this done and you can begin transacting business after an approval letter is availed to you which will be valid for as long as the company is in existence. 

2) Obtaining a permit to transact business
After being approved, the most important and at the same time integral part of the procedure is to obtain a permit from TradeNet. The beauty about using Singapore’s TradeNet is that you can submit applications electronically for processing. You will be needed to acquire one permit for exporting and another one for importing goods from other countries both known as OUT and IN permits respectively. Investors are guaranteed very affordable registration and application fees during the procedure and this simply gets the ball rolling in the quest of establishing a business empire that will flourish enormously. 
 

Different controls for different goods. 

Goods such as cigarettes, animal products, food products, petrochemicals and pharmaceutical drugs are termed as Controlled Goods. This simply means that the import or the export of these goods is regulated by Controlling Agencies. This is done to monitor the traffic of these goods because they are deemed to be vital in any state and the regulation ensures that there is no short or surplus in any nation for these goods. 

Any entrepreneur intending to trade in this goods will again require a special permit for these goods in addition to the initial IN and OUT permit for exports and imports. This application is done either at a Freight Forwarder or a relevant controlling agency via the Singapore TradeNet for approval. The process is quite easy and you need not wait for ages for the approval of your application. It is quite fast and within 48 hours, you can rest assured that your submission will be authenticated and you can get started with the importation and the exportation.

For High Technology Goods such as electronics and machinery will require a whole new different authorization of trade.  The importer in Singapore will be required to produce an Import Certificate and Delivery Verification certificate from the exporter. Any High Technology Good traded under the ICDV authorization has to be imported into Singapore directly without diverting it to any other country. The ICDV is obtained from the Singapore Customs via application.

For Strategic Goods which are inclusive of weapons are traded under the Strategic Goods (Control) Act. An investor has to have a legitimate Strategic Goods Control TradeNet Permit. 
The taxes

For any entrepreneur intending to start a trading company in Singapore, you will need to have prior knowledge of the taxes you are bound to pay to the government. This will certainly come in handy in dictating the niche of investment you intend to make. In Singapore, there are three major types of taxes. They comprise of Singapore Custom Fees, Customs and Excise Duties and last but certainly not least the Goods and Services Tax. 


The Singapore Custom Fees is the most basic form of taxation in the country. It is charged on all procedural and administrative fees during the provision of permits and licenses of trade. 
The Custom Excise Duties are charged on all dutiable goods which are inclusive of but not limited to tobacco products, alcohols and liquor and also all motor vehicles whether imported or exported. 

The Goods and Services Tax commonly known as GST is charged on all imported goods into Singapore that are bound to be consumed locally by the citizens. Currently, the tax is 7% of the value of goods or services regardless of whether they are dutiable or not. It is collected by the Singapore Customs and can be suspended or relieved accordingly depending on the prevailing economic times.

With that said, it is important for all the potential investors to put this knowledge in mind so that they can be able to determine the best investment for them and to help them project the growth of their trading company because at the end of the day it is the net worth growth that really counts.

 

Incorporation packages: Local and foreign businesses

 

Financing and insurance

For any potential investor planning to start trading companies in Singapore, you are probably wondering how you can secure your investment considering the huge financial risks that are prone. Well, there are basically three ways you can do this. 

There is the Letters of Credit commonly known as LC, getting a loan and by insurance. A letter of credit helps a lot in reducing the financial risks because one actually gets to receive payments before exporting their goods or in the event of importation, buyers don’t have to pay until they have verified the receipt of goods. It comes with a wide variety of options such as back to back LC, packing credit and trust receipt in which one can chose the one that is the most suitable. 

Moreover, one can get a loan from banks in Singapore for the purpose of the improving the trading experience. These loans come in the form of overdrafts, inventory financing, revolving line of credit, factoring loans, term loans and also transaction loans which are all aimed at securing your business in good hands. 

One can also insure his or her trading company. This comes in handy in protecting the investor from risks such as non-payment from buyers. Insurance plays a big role in compensating for these risks. Provided that the claim is made in due time and verified to be authentic, the compensation is paid. These are absolutely conducive aspects that Singapore offers to ensure that operating a trade company in the country is safe and the risks are very minimal. Insurance Authorities in Singapore have indeed proved to be very reliable.


Storage

If you are probably wondering how you can acquire storage for your goods. Singapore provides Licensed Warehouses for the storage of dutiable goods. These types of warehouses provide a temporary storage for the dutiable goods where the Goods and Services Tax for the goods is only suspended when the goods are claimed and supplied in the local market. 
Zero-GST Warehouses provide another option for investors to store goods that are non-dutiable thus the name. The GST tax is also suspended only when the cargo is cleared.

 

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Clearance

The clearance of goods on arrival or also in departure is regulated by an oversight regulatory board known as the Immigration and Checkpoints Authority. The officers involved check all the necessary logistics and correct documentation from the relevant authorities before clearing any goods. The clearance of goods entirely depends on the nature of the goods in place, whether they are being imported or exported and the officers may vary the procedure depending on the means of transport used to carry the goods. The process is usually quite fast unlike in many other countries where the clearance of goods at ports takes ages. 


Conclusion

With all that said and in mind, it is with no doubt that Singapore is the most ideal investment destination and development hub in a world that is quickly developing. Starting up a trading company in Singapore will indeed be an easy experience for many entrepreneurs who are willing to explore the growth potential and diversity in business opportunities Singapore has to offer. 

 

Want to know more about bank account opening procedures and popular government funding schemes? Refer to our introductions below

SINGAPORE COMPANY BANK ACCOUNT OPENING GUIDE

POPULAR GOVERNMENT FUNDING FOR CORPORATES