The present-day world is evolving into a global village with the successful institutionalisation of international trading via economic factors. Commercial objectives are positioned considering the nature of the nation’s politics in trade. Tax effective global trading structure in the procurement and supply of goods and services is the crucial to the success of several ventures.

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Primary Attributes of International Trading

International trade is to boost production and to elevate the standard of living of all individuals. International trade aids citizens of country A to procure the possession of goods produced in some country B and so forth. Let’s take a glance at the main characteristics of international trading –

• Separation of Buyers and Producers

In inland trade producers and buyers are from the same nation however in foreign trade they are pertained to various countries.

• Foreign Currency

Foreign trade requires payments in foreign currency. Various foreign currencies are exchanged while trading with other nations.

• Confinements

Each nation has their own set of limitations regarding the imports and exports. Generally, imports undergo several import duties and restrictions imposed by importing country. In the same manner, several rules and regulations are to be abided by while sending goods outside the country.

• Intermediaries

The processes, rules and regulations engaged in foreign trade requires a necessity of intermediaries to render their services for streamlining trade.

• Risk

The risk involved in foreign trade is comparatively higher owing to the distance.

• Governmental Control

In every nation, government regulates the foreign trade. It offers the relevant permission for imports and exports that may affect the decisions amongst nations prior to the trade.

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Essential Advantages

The accessibility of internet and technology offers lucrative opportunities for businesses of all sizes to earn potential benefits of international trade. Following are some essential advantages of international trade –

• Optimal Utilisation of Natural Resources

International trade aids each nation to utilise their natural resources optimally. Each nation can focus on production of those goods for which its resources are ideally suited. This reduces the depletion of natural resources.

• Accessibility of All Kinds of Goods

It allows a nation to acquire goods that it cannot produce or which it is not producing owing to several factors, and rather importing from other nations.

• Builds Expertise

Foreign trade aids in developing expertise and promotes production of various goods in various nations. Goods can be produced at a comparatively low charge owning to labour.

• Mass Production

Because of international trade, goods are produced not just for internal consumption but also for export to other nations. Countries can arrange to export their surplus goods in the international markets. This increases mass level production in all nations of the world.

• Cost Stability

International trade equalizes the prices of goods throughout the world (excluding cost of transportation, etc.)

• Exchange of Technical Expertise

Developing nations can establish and develop new industries with the machinery, equipment and technical expertise imported from developed nations. This strengths the development of nations and the economy globally.

• Augmented Efficiency

Considering the competitive market, the producers in all nations seek out to produce enhanced quality goods and at the minimum possible cost. This augments the efficiency and advantages to consumers internationally as well.

• Elevated Transport and Communication

International trade needs ideal transport and communication. In order to avail the benefits of international trade, development via transport and communication is being made possible.

• International Association and Comprehension

The communication of individuals of various nations across the world aids in forming associations. It helps in better understanding of different cultures. It forms co-operation and cordial relations amongst different countries.

• Potential to Surface Natural Calamities

Natural calamities like earthquake, hurricanes, floods etc., impacts the production of a nation adversely. Shortage in the supply of goods during natural calamities can be matched by imports from various nations.

Important Considerations

The drive to increase and expand is ideal for business owners that have tapped the complete potential in their native country, seek to make contacts, network outside the organisation, in favourable environments. Keep in mind the following considerations before initiating international trade –

• Legal and Regulatory Barriers

Conducting business in foreign markets is feasible if the business is flexible to work within the local laws and regulatory guidelines. While reviewing legal and regulatory commitments, it is highly advisable to seek experienced legal counsel for overseas business practices in order to determine the hazards which may cause barriers for your business.

• Foreign Government Consideration

The stability of the local government and its authority are essential while evaluating overseas business alternatives. Essential aspects to bear are:

• Currency exchange rates
• Access to needed resources and materials
• Communication and transportation options
• Government assistance programs for businesses
• Access to affordable capital
• Protection policies for businesses
• Immigration and employment Laws

Ensure to seek local guidance over relevant political and business factors prior to considering any international trade.

• Business case

It is imperative that the business case caters to the challenges, adversity and rewards of expanding internationally. Some significant strategies to consider are:

1. Conduct a market study to analyse the market’s condition, economic feasibility, trends, financial price patterns and forecasts.
2. Perform a financial feasibility study to identify if the move yields financially.
3. Intellectual property and trademark protection, and ensuring the governmental bodies in that location acknowledge and safeguard the businesses proprietary requirements.
4. Partnership and liaison relationship development to seek consultation and opportunity by engaging in a local association with an existing client or supplier.

Labuan GIFT License

Labuan International Commodity Trading Company (LITC) is curated to cater to the requirements of organisations and financial institutions yearning to access international trading markets in commodities like petroleum and petroleum-related products (including liquefied natural gas (LNG)), agriculture products, refined raw materials, chemicals, base minerals, carbon credits and any other commodities as maybe approved by Labuan FSA.

LITCs are under the Global Incentives for Trading (GIFT) programme commenced in 2011 by the Labuan FSA. The GIFT programme is a structure of incentives created to attract traders of certain commodities to use Labuan as their international or regional trading base. To understand the in detail about the Labuan GIFT License and its relevant requirements, connect with the QX Trust team of consultants at CONTACT US or consultant@qx-trust.com.