Establishing an Office

The Singapore Accounting & Corporate Regulatory Authority (ACRA) publishes a guide that takes the first time registrant through the process of establishing an office.  General information on establishing a business in Singapore can be viewed at http://www.acra.gov.sg. The process takes about one day for a sole proprietorship, while more complex business entities can take up to six weeks and require the assistance of lawyers and accountants to help with incorporation documents.  One point to bear in mind is that registration of a company does not automatically mean that expatriate staff can be assigned to Singapore.  Foreign staff must obtain employment passes from the Singapore Ministry of Manpower.

Joint Ventures/Licensing

Most Singaporean companies are open to joint venture proposals, and many are interested in manufacturing under license.  The Commercial Service at the U.S. Embassy in Singapore is active in matching American and Singapore firms for joint ventures not only in Singapore but also for third country markets.

Using An Agent and Distributor

Many American exporters use agents or distributors to serve the Singapore market and other markets in Southeast Asia.  Finding prospective partners presents no problem.  Singapore firms are aggressive when it comes to representing new products and usually respond enthusiastically to new opportunities.  Most American companies that use the U.S. Commercial Service (CS Singapore) business programs in Singapore find several interested agents or distributors.  CS Singapore offers a wide range of business programs and has an excellent record of success in introducing U.S. firms to the market.  A list of business programs offered by CS Singapore is on our website at www.buyusa.gov/singapore.

Distribution and Sales Channels

Singapore's distribution and sales channels are simple and direct.  Most consumer goods are imported by stocking distributors who resell to retailers.  Some goods are imported directly for sale in the importer's own retail outlets.

Franchising

Franchising is growing in popularity.  Many Singaporean firms are looking for new growth opportunities and are interested in investing in foreign franchise concepts.  Franchisees usually buy franchise licenses for the Southeast Asian region and not for Singapore alone.  Most franchisees finance their purchases of franchises through bank loans, personal savings or pooling resources from family members.  See the “Best Prospects” section in Chapter 4 for more information on the franchise sector in Singapore.

Direct Marketing

The direct marketing industry in Singapore includes direct mail, telemarketing, television sales, mail order, call centers, fulfillment and e-commerce firms.  The Direct Marketing Association of Singapore represents users and service providers who are engaged in database marketing, call center activity, fulfillment and e-commerce.  There are many creative consultants in Singapore who provide advice, market research, mailing lists, printing and mailing services.  Several companies provide telemarketing services and are involved in direct marketing through television.  Typical products sold through direct marketing in Singapore include consumer goods such as gifts, cosmetics, health supplements, stationery, fitness equipment, household appliances, bags and accessories. The direct marketing industry is well supported by service companies including Singapore Post, Singapore Telecom Call Center, Teledirect, TNT International Mail, Ogilvy One and MMS Consultancy.  The Singapore government also actively supports the industry through its Direct Marketing Program by assisting companies (through financial incentives) use direct marketing for their trading activities.  

The Direct Selling Association of Singapore (DSAS), a self-regulatory body, was established in 1976.  It provides a forum for all direct-selling companies in Singapore to discuss problems of common concern and to codify a high standard of business practices throughout the industry.  The DSAS has adopted a Code of Conduct by which member-companies in the Association are to abide by in every aspect of business.  Through the Code of Conduct, DSAS aims to further inculcate the spirit and practice of ethical direct-selling within its member-companies, setting examples for others to follow.

In Singapore, direct selling practices come under The Multi-Level Marketing and Pyramid Selling (Prohibition) (Amendment) Act 2000.  An Exclusion Order enacted at the same time sets out classes of schemes that are automatically allowed to operate. There is no application for approval required for any of these excluded schemes but companies usually seek legal advice to ensure their activities meet the eligibility criteria.

Under Exclusion Order 2 (1) (c), any scheme or arrangement, or any class of such scheme or arrangement, must satisfy the following conditions:

(i)  any benefit received by any promoter or participant in the scheme or arrangement accrues as a result of the sale, lease, license or other distribution of a commodity to any other person, and not as a result of the recruitment of one or more persons to be additional participants in the scheme or arrangement;

(ii)  the promoter of the scheme or arrangement shall not knowingly make, or cause to  be made:

1. any representation relating to the scheme or arrangement, or relating to the commodity, which is false or misleading; or
2. any omission in a material particular relating to the scheme or arrangement, or relating to the commodity;

(iii)  the promoter of the scheme or arrangement shall not make, or cause to be made, any representation to any person that benefits will accrue under the scheme or arrangement in a manner other than as specified in sub-paragraph (i); and

(iv)  the commodity shall be distributed with a refund or buy-back guarantee that is exercised on reasonable commercial terms, and every participant in the scheme or arrangement and every consumer of the commodity shall be informed of the existence of the guarantee and the manner in which it can be exercised.

Selling Factors and Techniques

Price, quality and service are the main selling factors in Singapore. Prospective exporters to Singapore should be aware that competition is strong and that buyers expect good after-sales service. Selling techniques vary according to the industry or, the product involved, but are comparable to the techniques used in any other sophisticated market.

Trade Promotion and Advertising

There are many specialized trade magazines in Singapore and scores of trade fairs that can be used to promote U.S. goods and services.  The major English-language daily newspapers are the Straits Times and the Business Times.  They are available online at http://www.asiaone.com.  The major Chinese language daily is Lianhe Zaobao (http://www.zaobao.com).   E-commerce web sites can be found at http://www.ida.gov.sg and at http://www.sg.  Leads for local advertising and promotional service agencies can be found at http://www.yellowpages.com.sg.  Contact CS Singapore for a list of specialized trade magazines and trade fairs.

Pricing

Pricing is very competitive.  Major department stores and retail chains offer fixed-price merchandise, while the smaller shops expect buyers to bargain.  Hard bargaining is common in the commercial and industrial sectors as well, where buyers usually want a discount and vendors inflate their initial offers accordingly.  Credit terms of 30-60-90 days are common.  Buyers will often retain 10% of the sales price for major electronic equipment purchases until the vendor has installed the machine, and it is performing according to specifications.

Typical Product Pricing Structures:
Depending on the type of product, importer mark-ups range from 20-40%, while retail mark-ups are often more than 100%.  Industrial goods are brought in by stocking distributors, who add on at least 20% before sale to end-users, or by agents whose commissions generally run about 7-10%.  These mark-ups are approximate and will vary widely depending on the product and the contractual relationship in question.

Sales Service/Customer Support

Good sales and customer support are vital in Singapore. The market is so price competitive that good sales support or customer service can make a big difference. Singapore distributors respond well to training on new products, and if properly supported by the U.S. manufacturer will do a good job cultivating old customers and developing new ones.

Selling to the Government

U.S. firms generally find Singapore to be a receptive, open and lucrative market.  Most American firms consider Singaporean government procurement system to be fair and transparent.  Bidders must meet the specifications set out in the tender and offer a competitive price in order to be successful.  Government procurement regulations are contained in Instruction Manual 3, available from the Ministry of Finance.  The Singapore Government also advertises its tenders on their website at www.gebiz.gov.sg.

Electronic Commerce

Singapore is one of the first countries in the world to enact a law that addresses issues that arise in the context of electronic contracts and digital signatures. The Electronic Transactions Act(ETA) (CAp 88) was enacted to provide a legal foundation for electronic signatures, and to give predictability and certainty to contracts formed electronically. The Singapore ETA follows closely the UNCITRAL Model Law on Electronic Commerce, which sets the framework for electronic laws in many countries.

The full text of the ETA can be found at the Controller of Certification Authority (http://www.ida.gov.sg) or the Singapore Statutes Online website (http://agcvldb4.agc.gov.sg/).

Protecting Your Intellectual Property

Singapore is a contracting state of the Patent Cooperation Treaty (PCT) and the Madrid Protocol, which are both administered by the World Intellectual Property Organization.  Under these treaties, a resident or national of Singapore may file international applications with The Intellectual Property Office of Singapore (http://www.ipos.gov.sg) whose core services include registration of patents, trademarks and designs, and copyrights.

Patents: Any person or corporation claiming to be the owner of an invention can apply for a patent in Singapore.  There are no restrictions or discrimination as to the nationality or residency.  However, an applicant who is not a resident in Singapore must provide the Registry of Patents with an address for service in Singapore to which all correspondence will be sent.  If a patent agent is hired to act on the applicant’s behalf, this address of service should be the business address of the patent agent.

Trademarks: The registration of a trademark is valid for 10 years from the date of application.  Protection can last indefinitely subject to the payment of renewal fees every ten years and with proper use of the mark. 

If a registered trademark has not been used consecutively for 5 years, there is a risk that the trademark will be removed from the Register.  Any interested party can reply to the Registry of Trade Marks to have an inactive registered trademark removed by showing proof of non-use.    

Copyrights: copyright protection is provided under the Copyright Act of Singapore.  The materials covered are original literary works (including computer programs) and dramatic, musical and artistic works.

Due Diligence

The U.S. Commercial Service in Singapore has seen a recent increase in the number of trade complaints involving credit card fraud.    The modus operandi is to use Singapore as the transit point, ask U.S. firms to ship the goods to a Singapore freight forwarder, collect the goods and disappear without a trace.  We suggest U.S. firms exercise caution when receiving unsolicited orders from new customers using credit cards for payment and contact the Commercial Service in Singapore before accepting such orders. 

Our office also offers an International Company Profile service to help U.S. firms check on their potential partners.  For more information, review http://www.buyusa.gov/singapore/en/icp.html.

U.S. firms can run a check on Singapore companies by accessing the ACRA database via www.acra.gov.sg.  Other credit agencies include CrimsonLogic Pte Ltd (http://www.biznet.com.sg), Yellow Pages Singapore Pte Ltd (http://www.yellowpages.com.sg), and Infocredit D&B (http://www.icdnb.com.sg).

Local Professional Services

Legal Services:
U.S. and other foreign law firms are not allowed to practice law in Singapore. Legal matters involving Singapore law must be handled by a local attorney. Details on the structure of the Singapore legal service can be found in http://www.lsc.gov.sg

Accounting Services:
The Institute of Certified Public Accountants of Singapore http://www.icpas.org.sg is currently the only official accounting body in Singapore. The Institute is responsible for accounting standards in Singapore and follows closely the standards set by the International Accounting Standards Board.

Engineering Services:
Where a professional engineer, resident or foreign, desires to engage in professional engineering work in Singapore, he/she shall apply for a certificate authorizing him/her to engage in professional engineering work within the branch of engineering indicated in the register of professional engineers as a branch of engineering in which he/she is qualified to practice. Application should be made with the Professional Engineers Board, Singapore http://www.peb.gov.sg.

Architectural Services:
Architectural Services: Under the Architect Act, no person shall draw or prepare any architectural plan and design intended to govern the construction of any building in Singapore unless the person is a registered architect who has a valid practicing certificate issued by the Board of Architects (http://www.boa.gov.sg).