Photo by Rubenerd
Someone mentioned to me the other day that Singapore is one of UK's major trading partners. That came as a surprise to me but after some research I realised that this is indeed the truth, Singapore is designated one of the High Growth Markets of UKTI (UK Trade & Investment). According to the UKTI, it is the UK’s largest trading partner in South-East Asia. Interestingly, Singapore is also one of the top UK import markets.
After some digging, I noted that there are five top questions to consider when deciding whether a business or a budding entreprenuer should consider when importing goods from Singapore.
1) Will it be truely costs-effective?
One has to consider the import duties and the foreign exchange rate. Does the business have enough cash flow to import? It is usually only cost- effective only to import in large quantities so this may make less cash available for operating expenses.
As you can imagine, shipping is done by the containers. Once a new container is required, the marginal increase in costs is minimal until that container is filled. Check with your supplier what the "sweet spot" is.
2) Do you need an import licence?
There are controls on the import of various goods into the UK. Importing controlled goods without the right licence is a criminal offence, so it's important to check first. For more information, refer to Business Link.
3) Who is the supplier?
Of course a business would have to determine the supplier's track record in supplying the goods but Singapore is set up such that it is easy to verify a company or business set up there. Singapore's legal system is also based on the English legal system and has been highly ranked by the World Bank Group in terms of enforcing contracts and resolving insolvency.
4) Requirement of a clear written contract
The importer and supplier should have a clear written contract stating what amount is due, in what currency, and when. The contract should also make it clear who is responsible for any bank charges. Again Singapore has a reasonably sound legal system to protect your contractual rights.
5) Does your bank have an experienced trade finance solutions team?
As with all international transactions, import/export letters of credit are really important. A Singapore supplier is likely to require an importer to arrange a letter of credit from its bank. The bank agrees to pay the supplier once all the right documentation - such as transport documents showing the right goods have been despatched - is received. The supplier must provide the required paperwork within the agreed time limit and with no discrepancies. It is also important to understand what documentation is required and ensure it is accurate. If you were to consider corporate finance, a bank experienced in providing trade finance solutions will be able to help you understand the documentation required. It should also be able to help you streamline the process and help you cut down transaction costs.
Saturday, August 11, 2012
Importing Goods from Singapore - 5 Things to Consider