In a move aimed at enhancing the financial flexibility of maritime businesses, the Maritime and Port Authority of Singapore (MPA Singapore) has issued Port Marine Circular No. 2 of 2024, declaring the waiver of security deposits and banker’s guarantees effective from April 1, 2024.
MPA currently requires all billing parties that are billed more than S$5,000 annually to furnish a security deposit or banker’s guarantee for credit terms for payment to MPA. The amount of security required from the billing party varies with the payment mode and credit history with MPA and is reviewed regularly as part of credit risk assessment.
To help reduce costs on maritime businesses, MPA will waive the requirement for existing billing parties to furnish security with effect from 1 April 2024, provided 1- the party has an approved General Interbank Recurring Order (GIRO) arrangement with MPA and 2- the party does not have 3 or more GIRO failures annually.
With this change, more than 80% of MPA’s billing parties are expected to have their security amount worth more than S$20 million/year waived, thereby improving their cashflow. These billing parties will also be able to save on the charges incurred on the banker’s guarantee.
Existing billing parties not on GIRO arrangement with MPA are strongly encouraged to do so to benefit from the waiver and cost savings. With GIRO arrangements, you will also save time and effort in monitoring and processing the invoices that are due for payment, as long as you ensure there are sufficient funds in the bank account. In addition to the due date stated on the invoices available on digitalPORT@SGTM, MPA provides an email notification on the amount for deduction 1 day before the deduction date. Late payment will incur interest charges. To sign up, please access the Interbank GIRO Application form via our MPA website (E-Services > Transactions with MPA > Opening An Account > Interbank GIRO Form) and send the completed physical form to MPA.
MPA will be reaching out to the eligible billing parties to refund the security deposit and/or discharge of banker’s guarantee from April 2024 onwards.
New billing parties with an expected annual billed amount of at least S$10,000 will be required to furnish an electronic banker’s guarantee of S$5,000 to MPA as part of the account opening process. Details and a list of participating financial institutes can be found at https://www.eguarantee.gov.sg. Following subsequent credit risk review based on transaction history, waiver will be granted to eligible billing parties.
For any further clarification, click here to visit MPA Singapore website