Singapore to amend Free Trade Zones Act to combat illegal trading activities

SINGAPORE is making amendments to the Free Trade Zones Act to enhance regulation and control of goods that flow through the 10 free-trade zones (FTZs) in the country.

The amendments include introducing a licensing regime on FTZ operators, new regulations on cargo handlers and more enforcement powers to customs authorities, Senior Minister of State for Finance Chee Hong Tat said in Parliament on Wednesday (Oct 4).

FTZs are designated areas where goods can be stored, handled and distributed without being subject to customs duties or taxes. They play a vital role in strengthening Singapore’s position as the world’s largest transhipment hub.

The Bill to amend the Act was tabled in Parliament on Sept 18.

Chee said the changes are necessary amid growing concerns that FTZs are being “misused for illicit activities such as weapons proliferation, environmental crimes and trade-based money laundering”.

He added that perpetrators try to mask such illegal activities as legitimate trade. Examples include providing false or inaccurate information on a cargo shipment or by swapping legitimate goods with contraband before re-exporting.

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Singapore is the second busiest container port in the world and the largest transhipment hub, handling about a fifth of the world’s container transhipment traffic.

Several MPs, including Jamus Lim of the Workers’ Party, Shawn Huang (Jurong GRC), Edward Chia (Holland-Bukit Timah GRC) and s Mariam Jaafar (Sembawang GRC), questioned the adequacy of the amendments.

Chee replied that criminals will always find new ways to circumvent the rules. To keep pace with evolving threats and the increasing sophistication of these criminals, Singapore has to “remain vigilant and strengthen its regulatory framework to detect and deter illicit trade”.

As many FTZ operators are now private entities, Chee said introducing a new licensing regime requiring them to go through an approval process is appropriate, as this will ensure that only those who meet the requirements are awarded licences.

While cargo handlers and agents do not have to apply for licences, the proposed amendments seek to regulate and clearly lay out their responsibilities, which include monitoring and managing the movement of goods at their premises.

They will also need to provide data on all goods passing through Singapore. Currently, only information on imported, exported or controlled goods is required.

Chee said this will enable better visibility of goods going through the Republic. “Customs can monitor the flows of goods for signs of illicit activity, and take the necessary action in close partnership with other international authorities.”

The amendments proposed also seek to enhance the enforcement powers of customs authorities. This includes allowing the Director-General of Customs to grant, renew, suspend or revoke licences, as well as impose or modify licensing conditions, order the removal of dangerous goods, and detain goods for inspection.

Chee addressed MPs’ concerns about the impact of the revised regulations on business costs, operational efficiency and Singapore’s overall competitiveness as a trading hub.

He emphasised that Singapore wants to facilitate trade and maintain a business-friendly operating environment. However, it should not be misused by bad actors for their illegal activities.

“The proposed amendments seek to strike the right balance between better governance and preserving our pro-business environment,” he said. 

Chee said the government consulted industry stakeholders to make sure the changes are designed and implemented in a way that will minimise the costs and compliance burden for companies, including small and medium enterprises. 

Implementation of the provisions under the revised Act will be phased in from early 2024. Companies will also have a six-month period to adjust to the changes, Chee added.

“Today, we seek to formalise these amendments into law and, in doing so, put Singapore on a stronger footing to combat illicit trade and remain a critical node in global trade flows. This will help Singapore to safeguard our position as a global trade hub,” Chee said. THE STRAITS TIMES