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Beginner’s Guide on Starting a Shipping Business in Singapore
Singapore’s rise as a leader in the international shipping industry has been nothing short of stellar. Beginning as an entrepôt hub, the island nation is now an undisputed international maritime centre (IMC). More than 140 international shipping groups and 5000 maritime establishments call it home – and the number is growing. That’s plenty of reasons for starting a shipping business in Singapore.
Those in need of more convincing can take a quick look at Singapore’s shipping and maritime industry statistics. The city-state is Asia’s go-to harbour for shipbroking and financing, as well as marine insurance and risk management. The sector accounts for 7% of the gross domestic product (GDP), with rapid growth driven by the digitalisation of infrastructure. Further, Singapore’s Maritime and Port Authority (MPA) states that Singapore is the top bunkering port in the world.
If you’re ready to set sail on the seas of success, you’ve come to the right port of call. The aim of this guide is to provide crucial building information to help kickstart your entrepreneurial dreams. It’s a handy read, full of pertinent material such as company incorporation, compliance regulations, etc. For further assistance, get in touch with us – 3E Accounting is just a click away.
What is a Shipping Business?
The term ‘shipping business’ is somewhat of a misnomer – is the business about owning a ship or shipping goods? The most concise answer is both, but generally, a shipping business also entails a ‘shipping agency’ in Singapore. Hence, in a nutshell, a shipping business is one that involves managing and handling both shipments and cargo. At a stretch, this may also extend to encompass ship charters, sightseeing, tours, etc.
Shipping businesses generally focus their main trade on shipping goods via seafaring vessels. It is not to be confused with freight forwarding, a category of logistics that involves numerous modes of transportation. Shipping facilitates transportation by sea only and includes inventory, safe passage, storage, etc.
Vessel classification ranges from a container, bulk or tanker ship to passenger, tugs, or pleasure crafts. A shipping business can include one or any of the following, amongst others:
- Dry cargo chartering
- Tanker chartering
- Container shipping
- Ship sales and purchase
Why Start a Shipping Business in Singapore?
As far as international maritime trade and commerce go, Singapore is a clear leader. Its world-class reputation in marine engineering, shipbuilding and repairs, port facilities, etc., leaves the competition far behind. Tag on strategic location, stable politics and governance, and it’s clear why Singapore is an international maritime frontrunner.
Aside from Singapore being a global shipping hub, there are numerous other reasons to base your business here. Primary amongst these is the solid support from Government agencies such as the Maritime and Port Authority. From innovative digitisation initiatives to schemes and grants, there’s plenty of incentives for the budding entrepreneur.
As a small or medium enterprise, your SME can take advantage of the following incentives, which includes tax exemptions:
- Maritime Cluster Fund.
- Maritime Seed Fund (MSF).
- Approved International Shipping Enterprise (AIS) scheme.
- Approved Shipping Logistics (ASL) scheme.
- Maritime Sector Incentive (MSI).
- Maritime Finance Incentive (MFI) scheme.
- Specific shipping income tax exemptions from the Inland Revenue Authority of Singapore (IRAS).
As the world prepares for a better and brighter future, the shipping industry is setting its sails for success. The UN Conference on Trade and Development’s (UNCTAD) Review of Maritime Transport 2020 forecasts expansions of 4.8% in 2021. Further, the global marine engines segment is forecast to grow at an annual compound growth rate (CAGR) of 3.1%.
Key Steps in Starting a Shipping Business in Singapore
Before donning your captain’s hat and sailing off into the horizon, you’ll need to register your business. This is a statutory requirement in Singapore and is a key step in starting a shipping business. The process of registering or incorporating your business is relatively straightforward and done online. You have a choice of doing it yourself or hiring Singapore company incorporation services for a more professional engagement.
Business registration is the purview of Singapore’s Accounting and Corporate Regulatory Authority (ACRA). All registration is via ACRA’s online business registration platform, BizFile, which requires a Singpass account to log in. Prior to that, your due diligence research should categorise what kind of business structure to set up. If you’re unsure, do have a read of 3E Accounting’s guide to company registration in Singapore for more information.
To get an idea of what the registration process entails, here is a simple, non-exhaustive framework:
- Pick a suitable company structure – e.g., sole proprietorship, partnership, limited liability partnership, limited company, subsidiary, etc.
- Choose a viable company name and register it with ACRA – you’ll need to follow ACRA’s specific ‘naming rules’.
- Put together necessary incorporation documents – e.g., Articles and Memorandum of Association, registered business address, details of directors and shareholders, etc.
- Submit your application, pay the relevant fees and wait for the approval.
- Register for appropriate taxes – e.g., GST, etc. – with IRAS
- Lease premises and hire and register staff.
- Purchase and register your vessel.
What Approvals Do You Need for a Shipping Business in Singapore?
After sorting the prerequisite of incorporation, it’s time to look into compliance requirements. Licences and permits vary depending on your business activity. The safest course is to get some professional help, as getting all the necessary approvals can be tricky. A corporate service provider such as 3E Accounting will get the job done for you seamlessly.
One of the first things to do is to register your vessel with Singapore’s Registry of Ships (SRS). A Ship Registration Certificate will allow your sailing vessels to transport both cargo and passengers.
The MPA’s Marine Licencing and Permits site handles online services for port clearance and licencing as of January 2020. Other maritime licences and permits your business may need includes:
- Craft Inspection Certificate
- Harbour Craft Licence and Port Clearance Certificate – to operate ships within and beyond Singapore’s ports.
- Launch a New Vessel Permit – to launch any new vessels longer than 15 meters.
- Port Limit Manning Licence – for the crew to work onboard.
- Employment Passes – if you have a foreign crew.
- Ship Registration Certificate – to carry passengers or cargo.
- Ship Sanitation Control Certificate – certifies the ship’s sanitary status.
- Ship Station Licence – for onboard radio-communication equipment.
You will also need miscellaneous permits to discharge, load, dock, or transit dangerous cargo. Aside from this, ancillary activities – e.g., purveying food and beverages onboard – may also require approvals. You may also need tour guide licencing if you’re planning on doubling as a travel agency.
Growing Your Shipping Business
There’s been plenty of news about the shipping industry lately, and not all of them have been positive. Stories such as the Ever Given are proverbial nightmares of the shipping business. However, this should not define your venture into this industry as it remains a robust and commercially viable enterprise.
It’s important to remember that this is more than just purchasing a ship and transporting cargo. It’s a business and, as such, needs a solid business plan with reliable and scalable strategies. Competition is also high, and an active social media presence will snare you a competitive edge. Investing in excellent website design or engaging reliable agencies to drive social media awareness is simply good business acumen.
You may also want to consider automation and how the digital economy can boost your business. Singapore has a world-class infrastructure, and its maritime and shipping industry benefits from digitalisation and technological innovation. There are also plenty of grants and incentives that encourage the adoption of technology into SMEs. Availing yourself of these is a great way to ensure your business stays technologically relevant.
Another good way to secure your business is to invest in training and education for yourself and your staff. Knowing the ins and outs of the business, the terminology, etc., will help you manage risks and liabilities better. Get a good handle on processes and procedures that concern the shipping business. It can save you a lot of time and money and help establish a professional reputation for your business.
Starting a shipping business in Singapore is a great business idea that can turn profitable with the right strategies. While there are many ways to do this, it’s essential to get the basics right. Starting your business off on the right foot with proper company registration and compliance is one of these.
If you’re on the lookout for comprehensive company incorporation packages, 3E Accounting has some great solutions for you. All our solution suites are impeccable, modern, fully digitalised, and completely customisable. Our team of global professionals are adept at utilising their local expertise in crafting the most viable outcomes. Contact 3E Accounting today and get the best business solution for all your incorporation needs.