Companies who seek to capitalize on the unique benefits offered by Singapore can apply to be a part of the Global Trader Programme, provided they satisfy certain basic criteria and conform to the list of qualifying products and commodities.
Growth of Singapore into an International trading hub
Singapore’s Trade Development Board was formed in 1983 to further enhance Singapore’s position as a premier international trading hub. Other initiatives in this direction were: Singapore joined the General Agreement on Tariffs and Trade (GATT). This agreement was designed to provide an international forum that encouraged free trade between member states. The introduction of “TradeNet” in 1989, the world’s first electronic, nationwide, paperless trade facilitation and documentation system. In 1994 Singapore endorsed the WTO agreement along with 81 countries. In 1996 a national award entitled “International Trade Award” was instituted to award 10 companies which have significantly contributed to Singapore’s international trade.
Singapore established an extensive Free Trade Agreement network with the world’s leading trading partners to help reduce the tax burden on a Singapore based business. Agreements have been signed with key economies such as USA, Japan, Australia, New Zealand, China, India, South Korea, Panama, Chile, Jordan, Switzerland, Iceland, Norway, and many more. Singapore is also part of “Schemes of Preferences” designed to help reduce trade barriers. They are formed among nations who agree to give preferential trade tariffs to participating nations. In 2002, the Trade Development Board was renamed as the International Enterprise Singapore and is the lead agency under the Ministry of Trade and Industry. IE Singapore undertakes the active promotion of export of goods and services, and offshore trade. As part of its vision to attract international traders to set up a base in Singapore, it launched the Global Trader Programme (GTP).
What is the Global Trader Programme?
Launched in June 2001, the Global Trader Programme is a merger of the Approved Oil Trader (AOT) and the Approved International Trader (AIT) programmes which started in 1989 and 1990 respectively. The Approved Oil Trader (AOT) Programme aimed at capitalising on Singapore’s growing role as a refining centre in the region. Shortly thereafter, the Approved International Trader (AIT) Programme was launched to attract non-oil companies. Twenty years later, both the Programmes were merged into the GTP which now allows for an expanded product base for companies to trade in, including both energy as well as non-energy products and commodities.
The main aim behind initiating such a programme was to boost Singapore’s position as the preferred regional base for the trading operations of global traders. The GTP aims to achieve its objective by allowing companies (who are part of its programme) to benefit from a 10% concessionary tax rate that is offered on their qualifying trade income for a five year renewable period. Furthermore, in 2003 the Singapore Government announced that high-growth medium sized international trading companies that are keen to choose Singapore as their regional base for trading activities, can be considered for the concessionary tax rate for an initial, non-renewable 3-year period. During this period the companies can establish and develop their regional or global trading network, with Singapore as their base. Once the companies are able to demonstrate sustainable growth projections that are in line with the requirements of the GTP, they can apply for the 5 year renewable GTP scheme after the initial 3 year pear period.
Who can apply for the Global Trader Programme?
You can apply to be a part of the Global Trader Programme if:
You are a well established international company, (large or medium sized) and carry out international trading, procurement, distribution and transportation of qualifying commodities and products.
You intend to use Singapore as your regional base for your principal offshore trading activities, business activities and support functions, including general and administrative management control; business and investment planning and coordination; financial control and treasury functions; market development and planning; logistics management including warehousing and freight services. You are be a bona fide company with a global network and good track record; You can ensure that you will:
principally conduct substantial offshore trading activities
incur a significant amount of local business spending in Singapore
employ a substantial number of experienced trading professionals in Singapore
make significant use of Singapore’s banking and financial services and its ancillary services (e.g. trade and logistics services, trade institutes and trade arbitration services etc. )
impart manpower training and aid in the development of trading expertise in Singapore
In addition, the applicant company will be required to meet the following benchmark criteria. If the company does not meet the benchmark criteria, it will be required to show that it can commit to these benchmarks for its projected incentive period :
Minimum Annual Turnover – USD 100 million
Minimum Annual Local Business Spending – SGD 3 million
Minimum Employment of Trading Professionals – 3 (involved in either procurement/sourcing, sales & marketing, risk management). May include senior management and can either be local or expatriates.
Note: The authorities will scrutinize your overall business plan and closely examine whether you are going to make significant contributions to the economy of Singapore before granting you admission to the Programme.
Qualifying products and commodities under the GTP
The following products and commodities are currently allowed under the GTP. This list is periodically reviewed and updated by the authorities.
energy commodities and products
agricultural commodities and bulk edible products
building and industrial materials
electronic and electrical products
Qualifying physical trade under the GTP
The GTP allows you to engage in the following types of physical trade:
re-export trade (only non-value added portion of trade are qualifying)
Qualifying transactions under the GTP
The GTP allows you to engage in principal trades, both buy as well as sell transactions, with offshore parties or other GTP companies.
GTP – Current Scenario
There are currently over 260 companies under the GTP basing their offshore trading activities in Singapore, with about 40% being oil traders.
In 2008, these GTP companies reported a turnover of USD 659 billion, a 36% increase from 2007.
In 2008, the oil trading companies under the GTP transacted some USD 509 billion of physical oil products, an increase of 31% from 2007.
Despite the economic slowdown and the fall in prices of carbon credits, trading volume in the global carbon market grew by 37% in the first quarter of 2009 compared to the fourth quarter of 2008.
Some of the companies enlisted under the GTP Scheme include: Goodyear and Bridgestone (located their global rubber procurement hubs in Singapore), Shell, BP, Vitol Asia, Hong Kong based Li & Fung (one of the world’s leading trading and distribution firms), Petrobras (Brazil’s national oil company), Bio-X (a bio-fuel Dutch company), Vietnam National Petroleum Corporation (Petrolimex), Tianbao Petroleum from China, Brightoil Petroleum from Hong Kong, Tricorna (Sweden based carbon trading company), Cargill (an international provider of food, agricultural, financial and industrial products and services has its Asia-Pacific headquarters located in Singapore), Hong Kong-based Noble Group (one of Asia’s largest commodity groups), Louis Dreyfus Commodities Asia (one of the world’s leading commodity merchants), Duferco Asia etc
Who administers the GTP?
The GTP was launched by the International Enterprise Singapore – an agency under the Ministry of Trade and Industry responsible for developing Singapore’s external economic wing. The IE Singapore’s mission is to promote the overseas growth of Singapore-based enterprises and foster international trade by positioning Singapore as a base for foreign businesses to expand into the region in partnership with Singapore-based companies.
Singapore has established itself as a reputable global trading hub with a significant number of key international players who have set up a base here. Going forward, the Government strives to create a supportive environment that will enhance Singapore’s position as a global trading hub. A veritable step in that direction includes the introduction of specific initiatives like the International Trading Institute (ITI), Global Traders Summit and International Trader Development Fund. The International Trading Institute is a tripartite project with the Singapore Management University and industry partners, which offers a business degree that specializes in international commodity trading. The Global Trader Summit is an exclusive event organized once in every two years, where top business leaders in the trading industry are invited to discuss major trends and fundamental issues shaping the future of global trading markets. The International Trader Development Fund aims at developing talent in the trading sector by offering to fund the course fees for companies that send their employees to the ITI for professional education courses.