This article was first published on 8 July 2020 and has been updated with additional reporting.
After starting your company in Singapore and achieving a measure of success, you might be considering expanding your business overseas – or perhaps you intend to use Singapore as a base of operations, and primarily serve global markets.
Whatever stage your business is in, you should start by looking at Enterprise Singapore, which is the one-stop government agency for supporting Singapore companies and foreign companies doing business in Singapore.
For Singapore businesses that want to spread their wings beyond Singapore’s shores, Enterprise Singapore has a range of grants, toolkits, services, and networks that you can tap on.
Market Readiness Assistance (MRA) Grant
The Market Readiness Assistance (MRA) Grant provides SMEs with up to 70% of eligible costs – such as overseas market promotion (capped at $20,000), overseas business development (capped at $50,000) and overseas market set-up (capped at $30,000) – for a total of $100,000 per new market from 1 April 2020 to 31 March 2023.
A new market is defined as an overseas country where your company has not exceeded $100,000 in overseas sales in any of the last three preceding years. The grant is disbursed on a reimbursement basis, and you can refer to the list of eligible costs.
To be eligible, your company must be registered/incorporated in Singapore, have at least 30% local shareholding and have a group annual sales turnover of not more than $100 million OR have a group employment size of not more than 200 employees.
Sole proprietors and partnerships can apply for the MRA Grant, but would be assessed on a case-by-case basis. For more information and to apply, visit the Business Grants Portal.
International Co-Innovation Programmes
To encourage innovation in companies for growth and internationalisation, Enterprise Singapore has International Co-Innovation Programmes that link local companies with overseas counterparts, spurring cross-border technology collaboration and the exchange of ideas and knowledge.
The aim is for participating companies to co-innovate solutions, build and validate the ideas, and then scale up into the region together. Currently, participants in the programme include the EUREKA Network, France, Germany, Israel and Shanghai.
Internationalisation Finance Scheme (IFS) – Non-Recourse
A cousin of the Enterprise Finance Scheme (EFS), the Internationalisation Finance Scheme for Non-Recourse (IFS-NR) provides mid-sized companies with up to $50 million in financing for local and overseas development projects.
The government co-shares default risks with Participating Financial Institutions (PFIs). Instead of evaluating the borrowers’ balance sheet alone, project income streams will also be taken into account, which allows companies to access financing that would otherwise be unavailable to them
To qualify, companies should be Singapore-based, have annual sales revenue (including subsidiaries) of less than $500 million (for trading companies) and less than $300m (for non-trading companies).
The qualifying Singapore entity must also have at least 30% equity share in the Special Purpose Vehicle and the overseas venture needs to complement the Singapore company’s core operations and demonstrate clear economic spin-offs to Singapore.
To apply and to find out more, you can contact the Participating Financial Institutions, including OCBC, DBS, UOB, Maybank Singapore, RHB Bank, Resona Merchant Bank Asia or e-mail Enterprise Singapore.
Multichannel E-commerce Platform (MEP) Programme
If you want to use e-commerce to sell products overseas, you can tap on the Multichannel E-commerce Platform (MEP) Programme under the Grow Digital initiative, which is a joint initiative by Enterprise Singapore and the Infocomm Media Development Authority (IMDA).
Whether you’re a manufacturer, retailer or distributor, MEP connects you with a pre-approved list of platforms you can use to list and sell your products on multiple overseas e-marketplaces and reach new customers.
In addition, the MEP Programme includes digital marketing support to help you increase brand value and drive traffic, and provides training programmes from the Singapore Institute of Retail Studies so you can learn how to run a successful e-commerce business.
SMEs who signed up for the MEP Programme from 1 April 2020 to 30 September 2020 will receive subsidies of 90% (up from the usual 70%) for eligible programme costs for a year, subject to meeting qualifying criteria and fulfilling deliverables.
To be eligible for the programme, companies need to be registered/incorporated in Singapore, have annual overseas online sales not exceeding $100,000 for each of the three preceding years, have at least 30% local shareholding, and have a group annual turnover not exceeding $100 million OR group employment not exceeding 200 employees.
Enterprise Development Grant (EDG) – Market Access
The Enterprise Development Grant (EDG) is a comprehensive support programme helping Singapore companies grow and transform under three pillars: Core Capabilities; Innovation and Productivity and Market Access.
Under the Market Access pillar, Singapore companies willing and ready to venture overseas can tap on the EDG to defray some relevant costs under four schemes:
i. Grant for Mergers and Acquisitions (M&A) – To help companies in the planning, assessment or post-M&A integration initiatives to grow their business.
ii. Grant for Overseas Marketing Presence (OMP) – To help companies expand into new markets by setting up an overseas presence to begin marketing and/or business development.
iii. Grant for Pilot Project and Test Bedding – To help companies build track record in a new geographical or product markets.
iv. Grant for Standards Adoption – To help companies adopt internationally-recognised standards and certifications in key industries.
Double Tax Deduction For Internationalisation (DTDi)
Hidden in the depts of Budget 2018, between the SG Bonus payout and planned GST increase, is the enhancement of a scheme that gives local companies a 200% tax deduction on eligible expenses for international market expansion and investment development activities.
Known as Double Tax Deduction Scheme for Internationalisation (DTDi), companies can enjoy 200% tax deduction for qualifying activities and expenditure across various stages of their overseas growth journey, capped at $150,000 in expenses.
To be eligible for DTDi, companies need to be based in Singapore and have the intention to expand the trading of goods or provision of services, and all applications must be submitted prior to starting the overseas project.
For more information and to register, visit the DTDi Portal.
Political Risk Insurance Scheme (PRIS)
Expanding overseas carries with it certain risks from political uncertainties. One important tool to manage these risks and safeguard your venture is through political risk insurance (PRI).
These risks include expropriation, political violence, breach of contract by host government, currency inconvertibility and transfer restrictions. With PRI, companies would also increase access to financing for their overseas projects.
With the Political Risk Insurance Scheme, Singapore companies can receive 50% of PRI premium costs for up to the first three years, subject to a maximum amount of $500,000 per Singapore company.
To qualify, companies need to have their global headquarters in Singapore, perform at least three strategic business functions in Singapore, have an annual turnover not exceeding $500 million, have an annual total business spending of at least $250,000 in Singapore for each of the past three years, and have a minimum paid-up capital of $50,000.
To apply, you can approach any Singapore-registered PRI broker or insurer to receive a customised PRI policy, and they can help you apply for PRI premium support from Enterprise Singapore.
Companies can also utilise the GoBusiness Gov Assist portal, which helps SMEs navigate government support schemes in Singapore.
Guides And Resources For Entering New Markets
Finally, you probably realise that entering new markets is as exciting as it is demanding. There are legal, financial, branding, and viability concerns. That’s why you might want to bookmark Enterprise Singapore’s comprehensive Export Guide as a reference on your journey.
For a smoother transporting of goods between countries, companies can tap on 16 Mutual Recognition Arrangements (MRAs) signed by the Singapore Accreditation Council (SAC). By having mutually and globally recognised reports and certificates issued by an accredited Conformity Assessment Body (CAB) Singaporean companies can have easier access to over 90 economies including China, India, Indonesia and the United States.
Enterprise Singapore can also provide you with referrals to a list of trusted in-market experts from a range of fields, including legal services, market consultancy, business setup and incorporation, HR and immigration, tax and accounting, customs, and more.
Companies deploying employees in China, India, Indonesia and Vietnam can also refer to the Global Talent Mobility Guide for a step-by-step checklist maintain compliance with immigration, employment tax and labour laws in overseas markets.
You can also look at the GlobalConnect@SBF by the Singapore Business Federation, which provides dedicated market access support to SMEs of all stages of internationalisation, thanks to their network of Singapore companies who have operations abroad and are more than happy to collaborate or share insights.
Behind the scenes, the Singapore government makes efforts (spearheaded by Enterprise Singapore and the Economic Development Board) to promote the Singapore brand and break down barriers for Singapore companies, with notable achievements being the many Free Trade Agreements signed with countries around the globe.
You can also tap on trade associations and chambers in Singapore for help with your company’s internationalisation plan. Trade associations and chambers also act as a valuable source of experience its member companies can provide to others seeking to penetrate new markets. For example, the Singapore Chinese Chambers of Commerce and Industry (SCCCI) reported that it had helped more than 680 companies expand into China in the first half of 2020 – in the midst of the coronavirus pandemic.
Funding For Your Overseas Expansion
Besides grants, your company will also need financial resources to embark on a successful overseas expansion plan. Not every company will be able to rely on internal funding to pay for their overseas expansion and ongoing operation, especially as there could be an upfront setting up costs before companies are able to reap any benefits.
This is where an SME Overseas Loan can come in handy. Typically, such loan requirements are similar to grant eligibility, requiring Singapore-registered businesses with at least 30% Singaporean and PR ownership as well as being incorporated for at least 2 years. As this is a working capital loan, it comes collateral-free to fulfill your cashflow requirements for expansion into overseas markets.
Such loans from Singapore banks also go beyond just your financing requirement. For example, OCBC’s SME Overseas Loan enable companies to leverage on its strong regional network across ASEAN, China, Hong Kong and beyond for their banking needs. Moreover, companies can also rely on OCBC’s in-depth understanding of the region through its wide network and expertise operating in overseas markets.
The stage has indeed been set for Singapore companies to take their businesses around the world and reach new customers near and far.
(Additional reporting by Dinesh Dayani)
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