As the fifth-largest economy globally, Southeast Asia presents an appealing market for exporters. Despite the pandemic’s impact on trade in the region, the e-commerce sector is thriving. Valued at USD62 billion in 2020, it is projected to reach USD172 billion by 2025. In 2020, new shoppers accounted for over a third of online commerce, with 8 out of 10 planning to continue shopping online post-pandemic.
While Southeast Asia comprises more than a dozen countries, Indonesia, Malaysia, and Singapore stand out as promising markets for exporters. Indonesia is the largest market in the region, while Malaysia and Singapore offer low entry barriers and serve as convenient hubs for reaching neighboring countries. Additionally, English proficiency is widespread in Malaysia and Singapore, and both countries boast well-developed infrastructures.
Focusing on Singapore, let’s delve deeper into its economic landscape, the pandemic’s effects, emerging shopper behaviors, and effective strategies for export to Singapore.
Singapore Export Market Overview
Singapore, a thriving and densely populated commercial hub, boasts a robust economy with a GDP of USD372.063 billion1 in 2019, positioning it as the fifth-largest economy in Southeast Asia. With a population of 5.7 million2 individuals and a wide range of global connections, Singapore presents itself as an appealing and easily accessible destination for businesses seeking expansion opportunities, particularly through cross-border e-commerce.
The current internet penetration rate in the country stands at 88%, with an additional 95% of users accessing the internet through their smartphones. Singapore, known for its high level of urbanization and compact size (approximately 300 times smaller than London), boasts nationwide coverage for eCommerce delivery services. In 2019, the value of its eCommerce market reached USD2.32 billion. However, due to the lockdown measures and travel restrictions imposed in 2020, consumers were compelled to shift towards online shopping, which undoubtedly led to a significant growth in the eCommerce market.
Customs and Import Regulations for Exporting to Singapore
Singapore is a key trading hub and two‑thirds of its GDP is derived from external demand. Developing and strengthening international ties is therefore a focus of the Singaporean government, with deepening and diversifying international connections one of the seven economic strategies of Singapore (see Report of the Committee on Future Economy: Pioneers of the Next Generation (2017)).
Singapore already has had 20 regional and bilateral FTAs with 31 trading partners, covering the majority of its trade.
• Six regional FTAs signed under the auspices of ASEAN with six countries individually, including China, Japan, Korea, India, Australia and New Zealand
• Three regional FTAs with EFTA and GCC and Trans-Pacific Strategic Economic Partnership
• 11 bilateral FTAs with China, the US, India, Japan, Korea, New Zealand, Panama, Peru, Australia, Costa Rica and Jordan
Singapore Customs, under the MOF, is the lead agency for trade facilitation. Imports and exports are regulated under the Customs Act, Regulation of Imports and Exports Act and other legislation by the relevant authorities (e.g. tax legislation). See the Acts and Subsidiary Legislation webpage on the Singapore Customs website. If you want export to Singapore, you need to understand this following regulations:
- Singapore Customs applies an 8% tax on all shipments. This is known as ‘GST’ (Goods and Services Tax). Some goods also incur duty — see the below section for more on this. GST is set to rise to 9% in 2024.
- Before your business can start to import and export goods to Singapore, you need to obtain a UEN number by registering with Singapore Customs.
- All goods imported into Singapore are regulated under the Customs Act, the Goods and Services Tax (GST) Act and the Regulation of Imports and Exports Act.
- Regardless of the bulk of your shipment, all your parcels must have the necessary paperwork. You can find out exactly what paperwork is required for shipping to Singapore in this useful guide.
- Once the paperwork is processed by Singapore Customs, it is then submitted to AsiaCommerce network where our certified international specialists process the shipment, without it being physically present in Singapore.
- Most shipments are successfully cleared once they are boarded enroute to Singapore. Import customs clearance processes are simple and are mandated by the local government.
- The submission of an import declaration and payment of duty/GST to Singapore Customs is performed electronically. Business entities are encouraged to register for an Inter-Bank payment account with Singapore Customs to make this payment easier. For non-business entities, AsiaCommerce can undertake the payments of duty/tax on their behalf (subject to terms and conditions) and recover the amount upon shipment delivery.
Challenges When Export to Singapore
Exporting to Singapore offers a lot opportunities due to its strategic location and vibrant economy. However, exporters may face several challenges that need to be navigated effectively. Here are the challenges and some tips on how to address them:
1. Stringent Regulatory Requirements
Singapore has strict regulations to ensure the quality and safety of imported goods. These regulations can be complex and vary by product type.
- Solution: Familiarize yourself with the Singapore Customs requirements and the specific regulations related to your product. Engage with regulatory consultants or local experts to ensure compliance. Utilize resources from the Singapore government, such as the Enterprise Singapore and the Singapore Food Agency, for guidance on regulatory standards.
2. High Competition
Singapore’s market is highly competitive with numerous international brands vying for market share.
- Solution: Conduct thorough market research to understand the competitive landscape. Identify your unique selling proposition (USP) and focus on differentiation strategies. Engage in targeted marketing campaigns that highlight your product’s unique features and benefits.
3. Cost of Doing Business
The cost of doing business in Singapore can be high, including expenses related to warehousing, labor, and logistics.
- Solution: Optimize your supply chain to reduce costs. Consider partnering with local distributors who can help manage warehousing and distribution more efficiently. Explore government grants and incentives aimed at reducing business costs for exporters.
4. Cultural and Market Differences
Understanding and adapting to local consumer preferences and business etiquette is crucial for success.
- Solution: Invest in market research to gain insights into consumer behavior and preferences in Singapore. Consider localizing your products and marketing messages to better resonate with Singaporean consumers. Engage with local partners or hire local staff who can bridge cultural gaps and provide valuable market insights.
5. Logistical Challenges
While Singapore has excellent infrastructure, logistics can still pose challenges, especially for perishable goods or products requiring special handling.
- Solution: Work with reliable logistics partners experienced in handling the specific requirements of your products. Ensure proper documentation and compliance with Singapore’s import procedures to avoid delays. Use advanced logistics technologies to track shipments and manage inventory effectively.
6. Trade Barriers and Tariffs
Though Singapore is known for its low tariffs, certain products might still face trade barriers or specific import duties.
- Solution: Check the tariff rates and trade barriers for your products on the Singapore Customs website. Take advantage of Free Trade Agreements (FTAs) that Singapore has with various countries to reduce tariffs. Consult with trade experts to navigate any potential trade barriers.
7. Intellectual Property Protection
Protecting intellectual property (IP) rights is critical, given the risk of counterfeiting and infringement.
- Solution: Register your trademarks, patents, and copyrights with the Intellectual Property Office of Singapore (IPOS). Monitor the market for potential IP infringements and take legal action if necessary. Educate your local partners and distributors about the importance of protecting your IP.
8. Currency Fluctuations
Currency fluctuations can impact pricing and profitability.
- Solution: Use financial instruments such as forward contracts and options to hedge against currency risk. Regularly monitor exchange rates and adjust pricing strategies accordingly. Work with financial advisors to develop a robust currency risk management strategy.
Sucessful Tips Export to Singapore
Exporting to Singapore can be highly rewarding due to its strategic location, advanced infrastructure, and pro-business environment. To maximize your success, consider the following tips:
1. Understand Market Demand
Before exporting, thoroughly research the Singaporean market to understand the demand for your products. Identify market trends, consumer preferences, and potential competitors.
- Action: Utilize market research reports, industry analyses, and consumer surveys. Engage with local market research firms if needed.
2. Comply with Regulatory Requirements
Singapore has strict import regulations to ensure product quality and safety. Ensure your products comply with all local standards and regulations.
- Action: Visit the Singapore Customs and Enterprise Singapore websites to understand the specific requirements for your products. Consider consulting with regulatory experts or local agencies.
3. Leverage Free Trade Agreements (FTAs)
Singapore has numerous FTAs with countries around the world, which can reduce tariffs and make your products more competitive.
- Action: Identify which FTAs apply to your country and products. Ensure proper documentation to take advantage of reduced tariffs.
4. Build Strong Relationships with Local Partners
Establishing relationships with local distributors, agents, or partners can significantly enhance your market entry and distribution capabilities.
- Action: Attend trade shows, business forums, and networking events to meet potential partners. Consider joining business associations like the Singapore Business Federation.
5. Optimize Logistics and Supply Chain
Efficient logistics and supply chain management are crucial for timely delivery and cost-effectiveness.
- Action: Work with reputable logistics companies familiar with the Singaporean market. Utilize Singapore’s excellent port facilities and consider warehousing options for faster distribution.
6. Adapt to Local Preferences
Customize your products and marketing strategies to meet local tastes and preferences. This may involve modifying product features, packaging, or branding.
- Action: Conduct focus groups and market testing in Singapore. Collaborate with local marketing firms to tailor your branding and advertising strategies.
7. Ensure Intellectual Property Protection
Protecting your intellectual property (IP) is crucial to prevent counterfeiting and ensure brand integrity.
- Action: Register your trademarks, patents, and copyrights with the Intellectual Property Office of Singapore (IPOS). Monitor the market for potential infringements and take legal action if necessary.
8. Utilize Digital Marketing
Singapore has a high internet penetration rate, making digital marketing a powerful tool for reaching consumers.
- Action: Develop a robust online presence through websites, social media, and e-commerce platforms. Invest in search engine optimization (SEO) and online advertising to increase visibility.
9. Understand and Mitigate Risks
Be aware of the financial, legal, and operational risks involved in exporting to Singapore and develop strategies to mitigate them.
- Action: Use financial instruments to hedge against currency fluctuations. Obtain export insurance to protect against non-payment or political risks. Ensure compliance with all legal requirements to avoid penalties.
10. Leverage Government Support
Both Singapore and many exporting countries offer various forms of government support to help businesses succeed in international markets.
- Action: Explore grants, loans, and advisory services offered by agencies like Enterprise Singapore. In your home country, seek out export assistance programs from government trade agencies.
11. Focus on Sustainability
Singapore places a strong emphasis on sustainability and environmental responsibility. Highlighting your commitment to these values can enhance your brand’s appeal.
- Action: Implement sustainable practices in your production and supply chain. Highlight these efforts in your marketing materials to appeal to environmentally conscious consumers.
12. Attend Trade Shows and Expos
Participating in trade shows and expos can help you showcase your products, meet potential buyers, and learn about market trends.
- Action: Identify relevant trade shows and expos in Singapore. Prepare thoroughly with attractive displays, marketing materials, and knowledgeable staff to engage with attendees.
Export to Singapore with AsiaCommerce Export Solution
AsiaCommerce is a procurement company that provides several services such as comprehensive market research, arranging partnerships in local industry, and creating sales programs based on market research.
Our Market Insight Research, Business Partnership Engagement, and Business Registration and Establishment services can help you expand and develop your business, register and establish your products and company.
Our strategy consulting services domain focuses on supporting private sector clients with comprehensive and specialized development regarding the company’s needs and also on the public sector for a broader scope.If you’re interested in exploring market opportunities in Indonesia, visit our service page for more information. Our team will work with you every step of the way, from finding a supplier, shipping door-to-door, and handling export documents to Singapore.
