Starting a shipping business in Singapore

This article is a guide to starting a shipping company in Singapore. A shipping company (also called a shipping agency or shipping agent) is an organization that manages and is held responsible for the handling of shipments and cargo, at ports and harbors worldwide, on behalf of ship owners, managers, and charterers. This article describes the steps for launching such a shipping business, the procedures for obtaining the necessary licenses, basic Singapore regulations related to this sector, government incentives for the shipping industry, and other pertinent information necessary to operate a Singapore shipping company.

Introduction

Ashipping company is engaged in shipping goods for trade. It receives and carries out an inventory of the cargo, checks the quantity and condition of the items, and makes any special arrangements that are necessary — such as providing chilling facilities for perishable food items. The shipping company is responsible for the cargo until it reaches its destination, or, depending on the contract, until the owner takes possession of the goods. In a nutshell, shipping businesses arrange all aspects of the cargo’s transportation by sea, from the seller to the buyer.

Singapore is a global leader in international maritime trade, construction of marine vessels and offshore structures, engineering of marine equipment, and ship repair. Due to its excellent reputation in the maritime and shipping industry, its strategic location, and its sophisticated port facilities, shipyards and related services, Singapore has developed as a premier international maritime centre. Ships from all over the world convene here and services in shipping, commerce, and logistics flourish. The shipping sector is a significant segment of Singapore’s economy, representing 7% of the nation’s GDP and employing more than 170,000 people in various technical and commerce-related functions.

These favourable conditions, together with the country's pro-business regulations, favourable tax treatment, and Free Trade Zones policy, have encouraged entrepreneurs and business leaders to incorporate shipping ventures in Singapore. If you are among those considering such a move, this article is for you.

The guide includes the following topics:

Singapore shipping regulations

As the recent events in Beirut have shown, improper shipping and storage of trade goods can lead to catastrophic disasters. Most countries design their shipping regulations to ensure that the sector is not used for illicit trade and conducts its business in a safe manner. The shipping law of Singapore covers the areas of carriage of goods by sea, admiralty law, and merchant shipping legislation. So far as the carriage of goods by sea is concerned, Singapore regulations are modelled after similar laws in the United Kingdom. Common law principles and the following statutes are the main regulations governing the Singapore shipping industry:

  • The Carriage of Goods by Sea Act forms the main body of the law on carriage by sea.
  • The Bills of Lading Act covers the issues of bills of lading and certain other shipping documents.
  • The High Court (Admiralty Jurisdiction) Act is the primary legislation relating to admiralty jurisdiction, legal proceedings in connection with ships, the arrest of vessels and other property, and other related issues.
  • The Merchant Shipping Act is Singapore legislation that covers areas such as the powers of the port authorities, registration of mortgages, limitation of liability, registration of ships, and the rights of crew.

Government incentives for the shipping industry

The Maritime and Port Authority of Singapore (MPA) offers a range of schemes to help shipping companies grow and develop their businesses in Singapore. These incentives are available to both new and existing shipping and related maritime companies. Here an overview of some of these incentive programmes.

Maritime Sector Incentive

The Maritime Sector Incentive (MSI) helps shipping enterprises grow their businesses in Singapore. It consists of the following financial grant awards.

MSI–Approved International Shipping Enterprise (MSI-AIS) Award

The MSI-AIS award seeks to encourage international ship owners and ship operators to establish their commercial shipping operations in Singapore.

Benefits

An MSI-AIS company will enjoy tax exemption on qualifying shipping income for either:

  • A 10-year renewable period; or
  • A 5-year non-renewable period, with the option of graduating to the 10-year renewable award at the end of the 5-year period, if qualifying conditions are met.

Who is eligible

Applicants with a good track record and demonstrable business plan for their shipping operations in Singapore can apply. Applicants must be able to demonstrate how their shipping operations will make economic contributions to Singapore; this can be done through total business spending, performing additional ancillary activities within Singapore, and ensuring that the strategic or commercial decision-making functions will be performed in Singapore.

MSI–Maritime Leasing (MSI-ML) Award

The MSI-ML award encourages firms to use Singapore as their capital and funding base for financing their vessels or sea containers.

Benefits

  • Ship or container leasing companies, business trusts or partnerships will enjoy tax concessions for up to 5 years on their qualifying leasing income;
  • An approved manager (fund management company) of the asset-owning entity (shipping enterprise) will be awarded a concessionary tax rate of 10% on its qualifying management income.

Who is eligible

Applicants with a good track record and demonstrable business plan for their ship and container financing operations in Singapore can apply. The company must be able to demonstrate in its business plan how the ship or container financing operations will make economic contributions to Singapore.

MSI–Shipping-related Support Services (MSI-SSS) Award

The MSI-SSS award seeks to promote the growth of ancillary shipping service providers and to encourage shipping conglomerates to set up their corporate functions in Singapore.

Benefits

An approved MSI-SSS company will enjoy a concessionary tax rate of 10% on the incremental income derived from providing qualifying approved shipping-related support services, for a 5-year renewable period.

Who is eligible

Applicants should have a good track record and demonstrable business plan. A company should demonstrate how providing ancillary shipping activities will make economic contributions to Singapore; this can be done through total business spending, performing additional activities from Singapore, and number of professionals employed.

Withholding Tax (WHT) Exemption

To further promote the growth of the maritime sector, shipping firms will enjoy certain other tax incentives.

Benefits

Qualifying shipping enterprises will enjoy WHT exemption on interest and related payments made in respect of arrangements obtained to finance the purchase or construction of vessels, or the purchase of containers and intermodal equipment.

Who is eligible

The exemption is available to:

  • All Shipping Enterprises registered by the Singapore Registry of Ships;
  • Approved International Shipping Enterprise companies; and
  • Maritime Leasing entities.

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Basic licenses and permits to operate a shipping business

In order to operate a shipping business, you will require appropriate licenses or permits from the Singapore government. The exact license or permit that you may need will depend on your specific business activities; you will likely need one or more of the following. Our team can help you determine the licenses that will be necessary and submit the necessary application.

Harbour Craft Licence

The Maritime and Port Authority (Harbour Craft) Regulations state that no vessel shall be used as a harbour craft within the port of Singapore without a harbour craft licence issued by the Maritime and Port Authority of Singapore (MPA) to vessels used for commercial purposes within the port.

The following categories of licence are available:

  • SB — for vessels carrying bulk petroleum, liquefied gases, liquid chemicals or vegetable or animal oils;
  • SC — for vessels carrying dry or packaged cargoes;
  • SP — for vessels carrying passengers;
  • ST — for vessels used for towing, pushing, or pulling other vessels;
  • SR — for vessels used for any other purpose.

When applying for a harbour craft licence, you are required to submit the application via the Marinet platform. The following documents will be required while applying for a new harbour craft licence:

  • Identification belonging to the craft owner of licensee (Instant Information Printout from the ACRA);
  • Proof of ownership (this may include Bill of Sale, Charter Agreement, Builder’s Certificate, etc);
  • Proof of origin of vessel (such as Launching Permit, Import Permit, or General Arrival Declaration);
  • Insurance documents for a craft;
  • Approval letter from the owner of the premises;
  • Letter of approval for use of landing places issued by the owner or manager of the facilities;
  • Work Passes for foreign crew working on board;
  • Any other documents as may be required by the authority.

Ship Registration Certificate

A Ship Registration Certificate is necessary for all vessels that intend to transport passengers or cargo. The procedure for registering a ship with the Singapore Registry of Ships is quick and easy, and can be followed in 5 major steps.

1.Prerequisites

As owner of the vessel, you must ensure that you satisfy the prerequisites for registration. The owners of Singapore vessels can be citizens, permanent residents of Singapore, local companies or foreign-owned Singapore companies. The vessels should comply with relevant requirements laid down in the IMO Conventions, such as SOLAS 74, Loadline 66, Tonnage Measurement (TM) 69 and MARPOL 73/78.

2. Vessel name approval 

Obtain approval for your choice of the vessel name by writing to the Ship Registry Department.

3. Submit registration documents

Download and complete the application form on the MPA website. Submit the relevant documents as required for a provisional registration or a permanent registration. These documents include:

  • Company’s Business Profile;
  • Appointment of Agent form (if any);
  • Appointment of Manager form;
  • Evidence of Ownership documents;
  • Tonnage Certificate;
  • Class Certificate;
  • Other documents that may be required.

    4. Pay registration fees

    Pay the initial registration and annual tonnage tax fees:

    • The fee for initial registration is S$2.50 per Net Tonne (NT) subject to a minimum of S$1,250 (500 NT) and a maximum of S$50,000 (20,000 NT).
    • The annual tonnage tax is S$0.20 per NT, subject to a minimum of S$100 (500 NT) and a maximum of S$10,000 (50,000 NT).

    Note that all fees listed here in this article are subject to change. Therefore, you should always check for the most current applicable fees on the relevant government websites.

    5. Vessel registered

    Your vessel is successfully registered and you will receive a Certificate of Registry and a Carving and Marking Note.

    Port Limit Manning Licence

    It is mandatory that every crew member on board your harbour craft holds a valid Port Limit Manning Licence. Different categories of Manning Licences are issued for various types of crew members:

    • Port Limit Steersman Licence;
    • Port Limit Helmsman Licence;
    • Port Limit Special Grade (Deck) Officer Licence;
    • Port Limit 2nd Class Engine Driver Licence;
    • Port Limit 3rd Class Engine Driver Licence;
    • Port Limit Special Grade (Engine Driver) Licence.

    Applications for a new Manning Licence or renewal may be submitted via the Marinet platform. The application should be submitted within 6 months after the crew member has passed the examination and be accompanied by the following documents:

    • Certificate of Competency or Result slip from MPA’s Maritime and Port Training Section;
    • Identity Card (for locals) and Passport (for foreigners);
    • Work Permit or In-principle Approval for Work Permit or an Employment Pass;
    • Certificates of relevant additional courses attended.

    Upon successful receipt of the form, documents, and fee the MPA will issue the Port Limit Manning Licence.

    Vessels arriving in and departing from Singapore

    Vessels arriving in Singapore must make the relevant notifications and declarations to the Port Master at least 24 hours before arrival or immediately on departure by fax or telex. No special certificates are required. The departure procedure is a bit more complicated than arrival and requires obtaining a Port Clearance Certificate.

    Port Clearance Certificate

    All vessels must obtain a Port Clearance Certificate (PCC) before departing the Port of Singapore. A departure declaration, together with the relevant documents, must be submitted to the Maritime and Port Authority of Singapore (MPA) to obtain the PCC. The declaration can also be filled online via the Marinet platform.

    The departure declaration requires that you submit the following information:

    • Vessel details, such as vessel name, IMO number, Call Sign, Gross Tonnage, etc;
    • Purpose of call, such as loading of cargo, embarking passengers, repair, etc;
    • Departure details, such as departure date and time, next port of call, location on arrival, etc.;
    • Ship's trading certificates.

    The PCC issued by MPA is valid for 48 hours from the time of its issuance. Owners, agents or masters must cancel the PCC and obtain a new one if the vessel failed to depart during the validity period of the previously issued PCC.

    Shipping Business by the numbers

    If you are still deciding which country to choose for your shipping business, you should consider Singapore seriously.  It is a world leader in the shipping industry. Shipping is one of the most important sectors in the country’s economy  and it traces its roots back to Singapore’s very beginnings as a hub for entrepot trade. Having played such a critical role in Singapore’s development from a third world nation to a first world one within a generation, the shipping sector continues to be an engine of growth for Singapore’s business environment. As a result, the regulations and overall treatment of businesses in this sector is very favorable. That is the reason why a large number of international companies come here and various international awards accrue to the country. Here are some key statistics:

    • Singapore was voted #1 among maritime cities in the global survey Leading Maritime Capitals of the World 2019;
    • The city-state hosts more than 140 of the world’s international shipping groups;
    • The shipping industry contributes 7% of Singapore’s GDP;
    • The sector employs more than 170,000 personnel;
    • Singapore is home to more than 5,000 shipping companies.

    Steps to start a shipping company in Singapore

    Step 1. Register your Singapore company

    The first step towards conducting shipping activities is to incorporate your Singapore company. The most suitable form of entity for this type of business is a Private Limited Company (PLC). Our experienced Corporate Services Team can help you with registration and on-going compliance of your Singapore company, professionally and efficiently.

    Note that shipping companies are required to have a minimum paid-up capital of S$50,000.

    Step 2.  Register for Goods and Services Tax

    Your business should be registered for the GST when you have turnover exceeding S$1 million per year. If you earn less, you can register voluntarily. Additional information regarding Singapore GST may be found in our guide.

    Step 3. Find the premises

    Once you have incorporated your company, you should find suitable premises. A variety of rental options exist in Singapore; just find the one that best suits your shipping business’s needs and budget.

    Step 4. Find and register the vessel

    After your company is registered and the premises are secured, you may start looking for the ship suitable for your needs as well as performing the registration formalities.

    Step 5. Hire staff

    You’ll need employees to work on your vessel or in your office; therefore, you must adhere to specific regulations:

    • Onboard workers need to obtain a valid Port Limit Manning Licence, which will be discussed below.
    • If you are employing foreigners to work in Singapore, they will need to have a valid work pass. Work passes and other employment issues in Singapore are under the administration of the Ministry of Manpower. To find out more about applying for work visas, see our guide.
    • As an employer, you will have to observe the Singapore employment regulations.

    Step 6. Apply for licences and permits

    You will need to apply for the required permits and licences for your particular business operations. Here they are:

    • Harbour Craft Licence — needed to operate ships within Singapore’s port;
    • Port Clearance Certificate — needed to operate ships beyond Singapore’s port;
    • Ship Registration Certificate — needed to transport passengers or cargo;
    • Port Limit Manning Licence — needed for crew members to work onboard your vessels;
    • Launch a New Vessel Permit — needed to launch in the port a new vessel longer than 15 meters;
    • Ship Station Licence — needed to operate radio-communication equipment aboard your Singapore registered vessel;
    • Ship Sanitation Control Certificate — needed to certify your ship’s sanitary status to transport cargo;
    • Permit needed to discharge, load or transit dangerous goods and dock vessels carrying this kind of cargo; and
    • Other required permits and licences for related activities.

    Step 7. Get started

    Once all the formalities described above are observed, you may start shipping activities!

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    Summary

    Singapore has developed into a premier International Maritime Centre where shipping companies flourish while enjoying pro-business government policies. The country is home to more than 5,000 shipping businesses, contributing about 7% to Singapore’s GDP and providing jobs for more than 170,000 workers. Setting up a shipping company in Singapore is simple and fast, though it does require observing certain legal procedures. The relevant state authority — the Maritime and Port Authority of Singapore — supports the business needs of maritime enterprises through financial, manpower development, and R&D schemes, enabling your business to increase the scope and range of its shipping services and expand its business operations globally.

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