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A Golden Resurgence: Re-establishing Singapore as Asia’s Precious Metals Hub

By Lester Lu, Divisional Director, Metals & Minerals, IE Singapore

Published on March 9, 2017

In the early ‘70s, Singapore was an important location for the Asian gold trading community. Traders from the Far East congregated and converged on Singapore, tapping on its wellestablished trade infrastructure to reach international counterparties. Singapore’s status as a gold trading hub reached its peak with the establishment of the Gold Exchange of Singapore (GES), which listed two gold futures contracts and maintained its own clearing house. This eminence, however, did not last long: a myriad of policy changes in the ‘80s and early ‘90s gradually eroded Singapore’s competitiveness and diminished its relevance as a regional precious metals trading hub. With the introduction of Goods and Services Tax (GST) on precious metals in 1994, the trading community gradually moved to other pastures and Singapore lost its former lustre.

Singapore and its government however, remain progressive and forward-looking. Government policies are assessed and reviewed periodically to preserve Singapore’s relevance on the global stage. Following one such assessment in 2010, International Enterprise (IE) Singapore, the economic agency spearheading the country’s trade growth, envisioned Singapore’s resurgence as Asia’s precious metals hub.

In pursuit of this goal, IE Singapore first reviewed the policies responsible for diminishing Singapore’s competitiveness, while proposing applicable reforms. On 1 October 2012, IE Singapore officers, with assistance from other ministries and agencies (including the Ministry of Finance, Inland Revenue Authority of Singapore, and Ministry of Trade lifted the GST on Investment-Grade Precious Metals (IPM). Since then, annual gold volume traded has grown rapidly from 911 tonnes in 2012 to 2,624 tonnes in 20151. In tandem, IE Singapore facilitated more discussions with bullion banks, refineries, wholesalers and secured logistics providers in an effort to build up the precious metals ecosystem. Finally, noting the industry’s need for a consolidated voice and international representation, IE Singapore encouraged the Singapore Bullion Market Association to reprise its role as central body for the bullion industry. The SBMA currently serves as the touch point between government bodies and industry participants in Singapore, and the point-of-contact for foreign precious metals businesses looking to establish a Singapore presence.

Today, IE Singapore’s efforts have yielded fruit. The number of precious metals traders in Singapore have increased, and secured logistics providers have set up operations here. In addition, the physical movement of gold arranged from Singapore has risen by 65% between 2014 and 2015 to over 200 tonnes2. Metalor Technologies Singapore, the largest LBMA-accredited refinery in Southeast Asia in terms of capacity, began local operations in June 2014 and has since quadrupled its production of refined gold. SBMA has also begun expanding its regional networks and exposure of its members to business opportunities in new markets.

The physical movement of gold arranged from Singapore has risen by 65% between 2014 and 2015 to over 200 tonnes.

For all our achievements, these efforts in reestablishing Singapore’s eminence in precious metals are but preliminary, especially when compared to other prominent bullion hubs such as London and Switzerland. Increasing the participant network, increasing traded volume and seeding price discovery are just some of the developmental initiatives we will pursue in the coming years. Working hand-in-hand with SBMA and the rest of the bullion community, Singapore’s goal to be Asia’s precious metals hub may very well be an imminent reality.

1   SBMA Precious Metals Survey.
2   SBMA Precious Metals Survey.

Lester Lu is from the Trade Group in IE Singapore, which aims to develop Singapore into a top global trading hub. His particular focus is on Metals & Minerals, including precious metals. He has held several positions in IE Singapore, most recently as Regional Director for Middle East & Africa, based in Dubai, where he conducted business development for Singapore-based companies expanding into the Gulf Cooperation Council (UAE, Qatar, Kuwait, Oman, Saudi Arabia, and Bahrain) and the rest of the Middle East and North Africa.