Singapore waives security deposits and guarantees to reduce costs for maritime businesses

The Maritime and Port Authority of Singapore (MPA) on Monday (15 January) said it will be waiving the need for security deposits and banker’s guarantees for billing parties that MPA assesses to be of lower credit risk from 1 April 2024.

MPA said the  move is a result of extensive industry feedback, led by the Singapore Shipping Association (SSA), whose ship agency members raised that the freed up liquidity will greatly help the industry to internally redeploy their funds for maritime innovation and transformation needs. 

“This change will benefit about 80% of MPA’s existing billing parties, and therefore improve businesses’ cashflow by more than SGD 20 million each year, helping all Singapore’s maritime companies, including small-and-medium enterprises,” it said in a social media post.

In a separate post, MPA Chief Executive Eng Dih Teo said the scope of such payments include deposits for port dues collected by MPA for various services provided to vessels calling at the Port of Singapore.

As part of credit risk management measures, MPA currently requires all billing parties that are billed less than SGD 5,000 annually to furnish a deposit or banker’s guarantee to be allowed to make payment on credit terms. The amount of security deposits needed varies with the payment mode and company’s credit history.

To support maritime businesses, MPA will waive the security requirement for existing billing parties that have:

• an approved General Interbank Recurring Order (GIRO) arrangement with MPA; and
• not having multiple GIRO failures annually

MPA will contact eligible businesses to refund their security deposit and discharge their banker’s guarantee from April 2024, and conduct briefing sessions such as with SSA to the maritime community.

“With Singapore being an international maritime centre that is home to >5,000 maritime establishments and businesses, MPA will continue working closely with tripartite partners across Maritime Singapore to review and improve processes, reduce business costs, and strengthen our value-add to the global shipping community,” Eng added.

Photo credit: Justin Lim on Unsplash
Published: 16 January, 2024