Gold’s reputation as a storage of wealth and a hedge against inflation has attracted Asian investors, and especially those in the ASEAN region, as regional currencies continue to suffer a decline against the U.S. Dollar and the Euro this year.

The increasing demand for gold has been noted in several Southeast Asian markets and in response, governments and companies in Singapore, Indonesia and Thailand are planning to take advantage of the situation.

For example, Singapore aims to be the hub for gold storage in Asia and has ambitions plans to grow their share of worldwide demand to 10-15% in the next decade from their current 2%. In 2012, Singapore repealed a 7% tax on gold and silver to make precious metals trading tax free, a move that the city state believes will help in establishing Singapore as a major global market for investing in gold.

“It seems a little unfair to put a sales tax on what is essentially money. The removal of the GST on gold will allow Singapore to better compete with Hong Kong and other bullion trading centers in the region” Nick Trevethan, a senior commodity strategist at ANZ in Singapore told Reuters.

Singapore’s Freeport, opened in 2010, is a highly secure vault located in the city’s Changi Airport. The facility offers a range of services including the storage, shipping, display and trade of gold and other collectibles.

 

Indonesia’s government owned miner, PT Aneka Tambang (AnTam), is opening three new boutique stores in Yogyakarta, Medan and Batam. The company’s director of operations, Tedy Badrujaman, explained that AnTam keeps track of sales figures in every region they have operations in and that these cities were chosen for the location of their new boutiques based on local purchasing power and demand.

Finally, the Thailand Futures Exchange Index (TFEX) and seven other gold future brokerages in Thailand began an initiative to strengthen gold futures trading in the country. Starting in August of this year, the plan will allow investors to settle contracts that have expired with physical gold.

“It’s an alternative to investors, gold shops and others who can use gold futures in determining the desired future of gold prices, without having to pay in full. The physical gold settlement should enhance flexibility and help them better balance their risk appetite” said Kesara Manchusree, the managing director of TFEX in an interview with The Nation.

Investors around the world may wish to take advantage of the increasing variety of options to store, trade and invest in gold in Southeast Asia as demand increases and the region continues to take market share from their western competitors such as Zurich and London.

 

About Chandra Alatas

Chandra is the assistant manager of a large portfolio of residential and commercial real estate with holdings in Singapore and Jakarta, Indonesia. He is a specialist in property and REITs in Southeast Asia and the Middle East.
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