Overview of Singapore
Singapore is a stable economy in Asia and is constantly is a top tier of GDP economy (source Statistics Times), This offers fantastic opportunities for those companies selling into Singapore.
Singapore has a stable government, strong rule of law and effective regulatory system. It is ranked by the World Bank as the second easiest place in the world to start, run and do business. Singapore has a strong economy with a pro-active business culture. It is because of this that Singapore is regarded by many multinational companies as a suitable first location for establishing an office in Asia.
Singapore has a population of 5.8 million with 29% of the population under 25 years of age (source cia.gov). Singapore is the third most densely populated country in the world (source indexmundi.com ).
Singapore and its port acts as a major trading hub for aerospace, financial services, healthcare and medical, food and beverage services, energy services.
Singapore’s Business culture
Singapore was a British colony until 1963. It uses English and has adopted many of the UK’s business culture customs. However one must not forget that Singapore is influenced from many different Asian cultures such as India, China and Malaysia which may influence the way business protocols are to be handled.
Please keep in mind that prices quoted in U.S. dollars should be clearly stated so as to prevent confusion with the Singapore dollar.
Price, quality and service are the main selling influences in Singapore. Potential exporters to Singapore should be mindful that buyers in Singapore expect a good after-sales service. Selling methods would be the same methods used when selling into any other sophisticated market.
Setting up in Singapore
According to The World Bank, Singapore provides the world’s most business-friendly regulatory environment for local entrepreneurs and is ranked among the world’s most competitive economies (Source: The World Bank).
Singapore has straightforward options available to foreign companies who want to set up a presence in the country. Companies can establish a Representative Office (RO), register as a Branch of the parent, or incorporate as a Singapore company.
Agents are a popular choice for new exporters seeking to develop a market presence, particularly for smaller companies. Agents generally involve lower market entry costs than representatives and can provide good access to potential buyers. The challenge is to find an agent with the right contacts and right experience to suit your product.
The use of agents or distributors in Singapore by foreign companies is a common practice. Singapore firms are aggressive when it comes to representing new products and typically respond enthusiastically to new opportunities. Because of the relatively small size of the Singapore market, potential partners often ask to cover regional territories.
In Singapore, licencing is the preferred option to use instead of establishing of a joint-venture partnership.
Banking and Finance
The unit of legal tender in Singapore is the Singapore dollar.
For those selling into Singapore, it is a top world financial & foreign exchange trading center. Singapore has over 200 local and foreign banking and financial institutions.
More detailed information about Singapore as a financial center can be found on the Monetary Authority of Singapore website.
Tariffs and Non-Tariff Barriers when selling into Singapore
For detailed information on Singapore tariffs and regulations, please visit the Singapore Customs website.
The Port of Singapore includes a Free Trade Zone (FTZ) where goods in transit can be warehoused, resorted or repacked without any import duties being imposed. However if the goods are destined for Singapore they are subject to a GST (Goods and Services Tax) and/or an import duty payment.
Singapore applies duty free rates to most imported products; however it levies high excise taxes on distilled spirits and wine, tobacco products, motor vehicles and petroleum products. Click here to find out more about the dutiable products for Singapore.
The import of trade samples (excluding liquors and tobacco) that is below US$275 is not subject to payment of duty and/or GST. In addition, no permit is required for their import.
For most products Singapore does not apply any non-trade barriers. However there are a few products which must be highlighted:
- Electrical products should adhere to British electrical products standards and specifications.
- A licence is required for the import of Rice into Singapore.
- A permit is required for the importation of some specific animal’s, foods & plants.
- Cosmetics, medicines and medical devices must be registered and meet the compliance requirements of Singapore’s Health Sciences Authority.
Product certification, labelling and packaging
Labels are required on imported foodstuffs (including beverages), drugs, liquors, paints and solvents. Food labels (in English) should indicate:
- Advisory statements or allergens declarations.
- Country of origin.
- Expiry dates.
- Food Name.
- List of Ingredients.
- Name and address of manufacturer and importer.
- Net weight or volume.
- Nutritional Information.
- Packaging dimensions.
- Storage Instructions.
All pre-packed food products for sale in Singapore must be labelled according to the general labelling requirements of the Singapore Food Regulations. To find out more information about food labelling requirements please visit the AVA (Agri-food & Veterinary Authority of Singapore) page.
Labels in relation to cosmetics, health supplements and medicines should comply with the guidelines set by the Health Sciences Authority.
Products should be labelled in metric units or show a metric equivalent. However some products have mandatory size requirements include:
- Cooking salt.
- Wheat flour.
- White sugar.
Methods of quoting and payment
When selling into Singapore, C.I.F. (Cost Insurance and Freight) Prices are the preferred pricing method for Singapore. Prices given in U.S. dollars should be clearly stated to avoid confusion with the Singapore dollar. Volume quotations should be prepared using the metric system.
It is best practice for sellers dealing with new customers to use secured payment terms such as 100% payment prior to shipping, letters of credit or sight drafts (or bills of exchange).
Documentary & Clearance Requirements
- Commercial invoice.
- Bill of lading or Airway Bill.
- Packing List.
All imports into Singapore require an import permit. Importers are required to make an inward declaration, to find our more information please visit the Singapore Customs information on importing products into Singapore.
Business Risks when selling into Singapore
Companies selling into Singapore should commit to the highest level of corporate behavior and familiarize themselves with the laws of their country and the penalties pertaining to bribery of foreign officials.
Intellectual Property Protection
Singapore’s IP regime has been consistently recognised as the best in Asia and one of the best in the world.
Singapore’s Ministry of Law have set up a statutory board called IPOS (Intellectual Property Office Singapore).
Company law in Singapore is very similar to that in the UK. This is because up to the 1970’s the sophisticated legal system in Singapore was based almost entirely on British common law. The Singapore State Court system benefits from:
- Extensive legislative framework.
- Low levels of corruption.
- Reliable courts and dispute resolution.
Singapore Web Resources
Accounting and Corporate Regulatory Authority
Association of Banks of Singapore
GeBIZ, one-stop e-procurement portal
Health Sciences Authority
Immigrations and Checkpoints Authority
Inland Revenue Authority of Singapore
Intellectual Property Office of Singapore
International Enterprise Singapore
Land Transport Authority
Ministry Of Communications and Information
Ministry of Health
Ministry of Manpower
Ministry of Trade and Industry Singapore
Monetary Authority of Singapore
Singapore Agri-Food & Veterinary Authority
Singapore Economic Development Board
Singapore Government Online
The SME Portal
About the Author
Aidan Conaty is founder of TCI China & Goodada. Aidan is in Supply Chain Consultancy and he is a qualified accountant.