Some Important Points Regarding Singapore’s Global Trader Scheme
Singapore is well-known for the major role it plays in international trade and its responsibility as an imperative ‘port of call’ in particular for traders working between the eastern and the western time zones. Singapore is advantageously located at the center of Southeast Asia and its amazing connectivity by air and sea has enabled inter and intra regional trade. The island also stands as the14th largest merchandise exporter in the whole world and boasts of a trade to GDP ratio of a whopping 404.9. Singapore also is an International Maritime Center and is linked to over 600 ports in more than 120 countries. That’s not all! Singapore’s Changi Airport is one of the busiest airports when it comes to air cargo.
Then there are conducive factors like minimal restrictions on importing and exporting goods, clean governance, easy procedure to start a business, attractive tax incentives, various free trade agreements, and strong infrastructure has contributed to the country in becoming the hub for worldwide trade. With a futuristic aim to further transform global trading activities to a new benchmark, Singapore launched the Global Trader Programme (GTP) in June 2001, which was a scheme to encourage global trading organizations to opt for Singapore as their base of operations, by offering them discounted rates of tax. Organizations who are thinking of how to start a trade business in Singapore or want to take advantage of the exceptional benefits offered by Singapore could apply and be participate in the Global Trader Programme if they fulfill the basic criteria and match up to the list of qualifying products and merchandise. This article gives an overview of the Global Trader Scheme and its benefits, criteria for qualification for businesses and other relevant information.
Evolution of Singapore as an International Trading Hub
Singapore’s Trade Development Board was established way back in 1983 to augment Singapore’s spot as a leading global trading center. Other initiatives taken in this direction were:
- Singapore got attached with the General Agreement on Tariffs and Trade (GATT). This agreement was planned to provide a global forum that encouraged more and more free trade among member states.
- “TradeNet” was introduced in 1989, which was the world’s first electronic and paperless trade facilitation and documentation system. In 1994, Singapore went ahead and endorsed the WTO agreement alongside 81 countries.
- In 1996, “International Trade Award” (a national award) was announced to honour 10 organizations, which have played a considerable role in Singapore’s international trade.
- Singapore set up a far-reaching Free Trade Agreement network with the world’s leading commerce partners to aid in reducing the tax burden on a business based in Singapore. Many agreements have been signed with leading economies like USA, Australia, Japan, New Zealand, India, China, South Korea, Switzerland, Chile, Panama, Jordan, Norway, Iceland, and many more.
- Singapore is also participating in the “Schemes of Preferences”, which is designed to reduce and eliminate trade barriers. They are established between countries who agree to offer preferential trade tariffs to the partner or participating countries.
- In the year 2002, the name of the Trade Development Board was changed as the International Enterprise (IE) Singapore and now it’s the lead agency operating under the Ministry of Trade and Industry. IE Singapore leads the vigorous promotion of export of various goods and services and also offshore trade. With the main vision of attracting worldwide traders to set up their base in Singapore, it announced the launch of the Global Trader Programme (GTP).
What is the Global Trader Programme?
Launched back in June 2001, the GTP or Global Trader Programme is a very talked-about merger of two programmes known as the Approved Oil Trader (AOT) and the Approved International Trader (AIT), which started in 1989 and 1990, respectively. The Approved Oil Trader (AOT) Programme intended to capitalize on Singapore’s expanding role as a refining centre in this region. After some time, the Approved International Trader (AIT) Programme was announced to invite non-oil companies. After 20 years, both these Programmes were combined into one, called the GTP, which allows for a long-drawn-out product base for businesses to trade in, including energy and non-energy sector products and commodities.
The key reason for initiating this programme was to enhance Singapore’s status as the preferred regional destination for business and trading operations of international traders. The GTP is working to attain its goal by permitting the participating companies to gain from a 10% concessionary tax rate that is given on their qualifying trade income for a five year renewable period. In addition, in 2003 the Government of Singapore came up with an announcement that high-growth mid-sized global trading organizations that are eager to opt for Singapore as their regional base for their business activities could be given the concessionary tax rate for the beginning, non-renewable three-year period. During this time period, the entrepreneurs can register a company in Singapore and businesses can set up and develop their global or regional trading network, keeping Singapore as their base destination. Once the businesses exhibit sustainable growth projections that also comply with the GTP requirements, they are permitted to apply for the five-year renewable GTP scheme after the beginning three- year period.
Who all can apply for the Global Trader Programme?
One could be a part of the Global Trader Programme if:
- You are an international (large or medium sized) business that is well-established, and deals in international trading, procurement of goods, distribution and shipping of the commodities and products that qualify.
- You plan to use Singapore as your company’s regional base for carrying out your main offshore trading tasks, business activities and other support functions, which include:
- General management control
- Planning and coordination of business and investments
- Financial control and the treasury functions
- Market development, expansion and planning
- Logistics management such as warehousing and freight services
- You are be a genuine company which has a worldwide network and a proven track record
- You ensure that you would:
- Conduct offshore trading activities substantially
- Incur a major amount of local business expenditure in Singapore
- Employ a considerable number of experienced professionals in Singapore
- Use Singapore’s banking and financial services significantly and also its ancillary services (like trade and logistics services, trade arbitration services, and trade institutes etc.)
- Impart training and further develop the trading expertise in Singapore
Besides this, the applicant business would have to meet the following benchmark criteria. If the business does not comply with the benchmark criteria, it will be needed to prove that it can meet these benchmarks for its estimated incentive period:
- Minimum Annual Turnover has to be equivalent of USD 100 million
- Minimum Annual Local Business Spending has to be equivalent of SGD 3 million
- Minimum Employment of Trading Professionals – Three (who should be handling either procurement or sourcing, sales, and marketing division, or risk management). They could include senior management and could be locals or expatriates.
Please note that the relevant authorities inspect your detailed business plan and closely monitor if you will be making considerable contributions to Singapore’s economy before they grant you admission to the programme.
List of the qualifying products and commodities under the GTP
The following products and commodities are allowed under the GTP. This list is reviewed periodically and updated by the relevant authorities.
- energy products and commodities
- bulk edible products and agricultural commodities
- the building, construction, and industrial materials
- consumer products
- industrial products and commodities
- machinery parts and components
- electronic and electrical goods
Qualifying physical businesses under the GTP
The GTP permits you to carry out physical trade such as:
- Offshore business or trade
- Trans-shipment trade
- Re-export trade (including only non-value added part of a trade)
Qualifying transactions as per the GTP
The GTP permits you to carry out major trades, for example, both buying as well as selling transactions with global parties or other GTP companies.
Administration of the GTP
The International Enterprise (IE) Singapore launched the GTP. IE is an agency under the Ministry of Trade and Industry and is accountable for enhancing Singapore’s external economic wing. The IE Singapore’s goal is to advance the growth of Singapore-based enterprises abroad and also promote global trade by positioning this island as a base for overseas businesses to come and expand into this region by getting in partnership with Singapore-based companies.
Singapore has proven itself as a leading international trade and commerce hub with a big chunk of global players who have established their base here. In future, the Singapore Government is planning to develop a supportive setting and environment, which will further augment the nation’s position as an international trading hub. Another apt step in this direction was the introduction of some specific initiatives such as the International Trading Institute (ITI), International Trader Development Fund and Global Traders Summit. The International Trading Institute is basically a tripartite project with the Singapore Management University and other industry partners, which provides a business degree with a specialization in international commodity trading. The Global Trader Summit is a much-awaited, exclusive event, which is organized once in a couple of years, where top-most business leaders in the industry are invited to discuss and analyze on the major trends and the primary issues, which are going to shape the future of international trading markets. The International Trader Development Fund also aims at fostering talent in the trading sector by financing the course fee for companies that send their employees to the ITI to take up some professional education courses. So if you are looking to register a company in Singapore or visa services in Singapore, do contact us at IMC and we would be happy to help.