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The Rising Demand for Gold and Singapore’s Value Proposition

By SBMA

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Gold is closely connected with the life and culture of Asia and also plays an important role among investors here. In some countries in the region, gold is even regarded as more stable than the national currency and is used as a medium of exchange and a unit of measurement.

In general, people in Asia like to buy gold jewellery, not only as accessories or gifts for cultural or religious ceremonies such as weddings, festivals, and other special occasions, but also to store their wealth. When there is a bountiful harvest, people use their excess money to buy gold, to keep it for a rainy day. People then resell their gold to jewellery shops when they need money or visit pawnshops for short-term borrowing. Besides the demand for jewellery, political and global macroeconomic uncertainties mean that many investors consider gold as a stable and reliable asset, and many of them purchase physical gold such as bars or coins as part of their investments.

The growing middle class in the past decade among the Association of Southeast Asian Nations (ASEAN) countries with more discerning taste have posted challenges to the gold jewellery industry as well. Gold jewellery can no longer only serve the purpose of store of wealth but must appeal to the lifestyle changes of the emerging younger population. The digital transformation to the wealth management industry has also impacted the retail access to gold products, witnessed both in Singapore and the region, start-up entrepreneurs enticing both younger and savvy portfolio investors to gold investing/saving through digital gold products, an ongoing process that was received positively by the regulators and young investors alike.

Asia is the main driver of the rising demand for gold globally. Asian demand for jewellery and investment totalled 2,045 tonnes in 2021. The continent does not only comprise gold importing nations, but also includes countries that export gold as scrap or by-products of mining. According to Metals Focus, Asia’s gold mine production output remained the second-highest globally, at 610.4 tonnes in 2020, behind Africa at 931 tonnes.

Additionally, there is increasing investor interest to store gold in Singapore, which offers a neutral and alternate location for them to store their wealth. With its world-class physical infrastructure, Singapore is well placed to accommodate this demand. Its innate attributes of neutrality, economic and political stability, excellent connectivity and reputation as an important financial centre have long appealed to global investors. In addition, Singapore has a strong, efficient and transparent legal and judicial framework, as well as a strong rule of law. According to the Monetary Authority of Singapore (MAS), the country has the largest pool of assets under management (AUM) in Asia, with S$2.6 trillion in 2015. In 2020, its AUM increased by 17%, reaching S$4.7 trillion (US$3.5 trillion).

In addition to the Free Port at Changi Airport, Singapore also offers gold storage at The Reserve, a facility recently built by local precious metals dealer Silver Bullion. The Reserve is capable of storing up to 15,000 tonnes (about 482 million troy ounces) in silver – 60% of the annual world production – and 50 tonnes of gold.

The physical allocation of gold in investment portfolios has also been growing in Singapore, which has led to a growth in the number of companies setting up bullion operations in Singapore. Using the country as a base, they are able to leverage its infrastructure and geographical location to expand into Asia Pacific markets and benefit from the lack of foreign exchange and capital restrictions, as well as the availability of several tax incentives.

Economic overview

Singapore is a hub for logistics and finance in Southeast Asia and transacts very large imports and exports compared to the size of its own economy (Table 1). As a result, domestic economic trends are often influenced by broader economic and currency trends. Singapore also has very close connections with the Chinese economy through its extensive overseas network.

Table 1: Key Figures

Singapore 2021
Population 5.5 million
Economic Growth 7.6%
GDP S$ 533,352 million
GDP/P S$97,798
CPI 2.3%
Exports S$614.1 billion
Imports S$545.9 billion
Foreign Reserves U$417 billion
External Debt 471.3% of GDP (2020)
Source: CEIC, MAS, SingStat

History of Singapore’s precious metals market

Since the 1960s, Singapore has been a gold distribution centre for Southeast Asia, with its gold largely sourced from London and Zurich. In 1969, in the wake of a global evolution of the free gold market and a two-tier price structure following the collapse of the London Gold Pool, Singapore established an over-the-counter (OTC) gold market.

However, from 1969 onwards, only non-residents could perform gold transactions in Singapore, and banks and bullion dealers trading gold required authorisation from the Singapore government. Beginning in 1973, Singapore residents were finally allowed to trade gold, and the gold dealer licensing requirement was abolished.

In November 1978, a group of Singaporean bullion dealing banks and brokers formed the Gold Exchange of Singapore (GES). Founder members included United Overseas Bank (UOB), N. M. Rothschild & Sons Ltd and Overseas Chinese Banking Corporation (OCBC). GES listed two physically deliverable gold futures contracts: 100 oz and 1 kg. GES also established its own clearing house, the Singapore Gold Clearing House, whose clearing members were OCBC, UOB, Overseas Union Bank (OUB), DBS Bank Ltd and the Bank of Nova Scotia. GES gold contracts saw strong initial interest but trading volumes tailed off by 1983.

GOLD INVESTMENT ACCOUNTS AND GOLD ACCUMULATION PLANS OFFER ALTERNATIVES TO BUYING PHYSICAL METAL.

In late 1983, GES was integrated into a new financial futures market – the Singapore International Monetary Exchange (SIMEX), a collaboration between GES and the International Monetary Market (IMM), a division of the Chicago Mercantile Exchange (CME). In 1984, SIMEX launched a cash-settled 100 oz gold futures contract based on loco London prices. However, this contract also saw a gradual demise in demand and activity ceased by 1996, which led to it being phased out in 1997. SIMEX then merged with the Stock Exchange of Singapore in 1999 to form the current multi-asset Singapore Exchange (SGX).

Singapore’s role as a redistribution centre for the region in physical gold reached record levels in 1992, when gold imports hit 414 tonnes (almost half of Asia’s total consumption). Since then, imports have declined as a result of market liberalisation measures adopted by some of its immediate neighbours.

Consumption by domestic jewellers had, for many years, hovered around 18–22 tonnes at saturation level. The introduction of a 3% Goods and Services Tax (GST) in 1994 softened the demand for gold products. In 2003, GST was increased to 4% and then to 5% in 2004. In 2007, it was increased further to the current level of 7%. Domestic jewellery consumption was reduced to single digit tonnes and gold bar consumption is negligible due to the GST.

The establishment of the Singapore Freeport in 2010 provided Asia with its own Fort Knox, outfitted with cutting-edge security. It is a bonded warehouse, and no GST was involved if movement is confined within the premises, hence it was a popular choice for high-net-worth investors. Located next to Singapore’s Changi International Airport, it offers 22,000 sq. metres of strong rooms and showrooms with direct access to the airport runway and armed guards around the clock.

In 2011, International Enterprise (IE) Singapore (now known as Enterprise Singapore) revisited the precious metals sector with a proposition of revitalising Singapore as a gold hub like it was before the imposition of GST in 1994. It was met with the support of the industry key stakeholders. Recognising that investment precious metals (IPM) are essentially financial assets like other actively traded financial instruments like stocks and bonds, and to facilitate the development of IPM refining and trading in Singapore, the government announced in early 2012 that IPM would be GST exempt from October 1, 2012. As a result, the volume of non-monetary gold import jumped 78% and exports increased 37% in 2013 (data from IE Singapore).

With the concerted effort of multiple government agencies, Singapore was able to quickly anchor a first-class London Bullion Market Association (LBMA) accredited gold refinery – Metalor Technologies Singapore Pte Ltd, which opened in June 2014. This has proved to be an important addition to complete the supply chain and the eco-system of the bullion trade.

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Image provided by Metalor Technologies Singapore Pte Ltd

At the 2014 London Bullion Market Association Bullion Market Forum in Singapore, Singapore Trade and Industry Minister Lim Hng Kiang announced the Singapore Kilobar Gold Contract, the first wholesale 25 kilobar gold contract would be offered globally in October 2014. A Consortium comprising IE Singapore, World Gold Council, Singapore Exchange, and Singapore Bullion Market Association (SBMA) introduced centralised trading and clearing of a physically delivered gold contract in Singapore. The series of six daily contracts gives buyers physical access to competitively priced kilobars. Singapore’s position as the trading hub for ASEAN was further enhanced by the launch of the ICE One-Kilo Gold Futures on 17 November 2015.

During the launch, the Consortium considered itself ahead of all other industry players looking at the same proposition of modernising the spot gold market in light of the fierce regulatory headwind pushing the OTC trade into exchanges. The wholesale kilobar gold contract did not take off as intended. The contract was made dormant in March 2018, only to review the possibility of reviving it when the regulatory and market conditions change, the same happen to the ICE One-Kilo Gold Futures the following year.

Post analysis identified two critical initial issues, first, the lack of trading related to the size of the contract of 25 kilos; secondly the inability to select brands of kilobar/differential in premium pricing. The determining factor that led to its closure, as cited by the members, was the lack of efficiency compared to the OTC trade and the inertia to change among traders, leading to the view that efforts to change the other two issues may be insufficient.

A new era

In 2016, with the ambition to build Singapore as a precious metals trading hub, IE Singapore funded the formalisation of the SBMA and helped to raise its profile under the Local Enterprise and Association Development (LEAD) program.

Since 2017, SBMA has organised its annual Asia Pacific Precious Metals Conference (APPMC), a platform for the precious metals community to raise and discuss issues related to the Asia Pacific precious metals market. APPMC aims to provide networking opportunities for the bullion, jewellery and mining sector from the region and the world. Delegates could also learn more about new markets and meet new customers and suppliers from ASEAN and Asia through the conference. SBMA also publishes its quarterly newsletter Crucible to encourage stronger ties among participants in the industry and create new growth opportunities.

Originally, SBMA was established in 1993 to represent key stakeholders from the precious metals industry, including bullion banks, exchanges, refineries, bullion merchants and secure logistics companies to dialogue with the authorities related to GST exemption on gold trading activities and products, it remained focused on social activities until it was formalised in 2016.

SBMA now provides market knowledge and advice to relevant ministries and government agencies both in Singapore and ASEAN; industry stakeholders; bullion banks; and other business entities related to the bullion business. We are enabler and super connector to our members in developing the ASEAN countries bullion business.

Jewellery market

The Singapore jewellery market is a developed and matured consumption market, with no manufacturing facilities except some workshops doing some bespoke pieces with designers. But Singapore has the advantage of being able to source the latest jewellery designs from manufacturing centres in China, Malaysia, and Indonesia as well as Italy and Turkey. Major players, including Poh Heng, Aspial, SK Jewellery Group and more, each have different types of shops established under different brands to cater to different categories of customers. Middle-class consumers typically purchase mid-priced products from regular jewellery stores or goldsmiths, as well as through online platforms. Like other Asian gold jewellery buyers, both mass market and high-end buyers do not only purchase gold jewellery as accessories but also look for investment value in the jewellery that they choose to buy. Without a doubt, both classes are equally important to the jewellery market in Singapore.

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Image provided by GoldSilver Central

Retail investment

Retail investors look for small bars and coins or gold saving account to gain exposure to gold investment. UOB is the key provider of gold savings accounts, as well as small and kilo gold bars to retail investors. Some gold jewellery outlets also sell small bars and coins as well and they provide more convenience than banks because they have longer service hours and are easily accessible across the country. In recent years, with the advance of online service providers, retail investors, particularly the younger and tech savvy, have been patronising key players like GoldSilver Central, Silver Bullion, Bullion Star; while high net worth individuals also deal with Global Precious Metals and J. Rotbart & Co., which also offer storage solutions as well.

Regulatory bodies

  • Enterprise Singapore (ESG) – Spot Commodity Trading
  • Monetary Authority of Singapore (MAS) – Exchange trade and derivative trade
  • Inland Revenue Authority of Singapore (IRAS) – GST

Gold Import and Export Statistics

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Table 1: Key Figures

Non-Monetary Gold HS 71081300 & HS 71081200 in Tonne
  2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Import 215 382 356 375 291 346 345 231 297 256
Export 259 356 467 405 327 391 308 274 298 296
Total 474 738 823 780 618 738 653 505 595 552

HS Code: HS71081210: Non-monetary gold in lumps ingots or cast bars HS71081290: Non-monetary gold in other unwrought forms HS71081300: Non-monetary gold in semi-manufactured forms

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Singapore Bullion Market Association Secretariat-Lee-Jia-Yi

Lee Jia Yi

OPERATIONS & ADMIN EXECUTIVE
Before joining SBMA, Jia Yi worked as an Admin & Reporting Officer in her previous role. She holds a Diploma in Business & Social Enterprise from Ngee Ann Polytechnic. Jia Yi is responsible for managing and maintaining physical and digital files in SBMA, supporting invoicing processes, reconciling receivables and payables, coordinating meetings and conferences. Additionally, she will provide support to the team and assist the Business Director in managing the Association’s office operations and general administrative activities.

SECRETARIAT SBMA-Emily-Oh

Emily Oh

OPERATIONS & ADMIN EXECUTIVE
Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

SECRETARIAT SBMA Clara-Chang

Clara Chang

MARKETING & COMMUNICATIONS EXECUTIVE
Clara Chang joins SBMA as the Marketing & Communications Executive, enriching the team with her extensive experience in content creation, social media management, and digital marketing. Prior to joining SBMA, Clara held the position of Marketing Executive at her previous job. She holds two bachelor’s degrees from the University at Buffalo, one in International Trade and another in Geographical Information Science. Her core duties will include maintaining the SBMA website, managing the quarterly Crucible newsletter, among other responsibilities.

SBMA Committee-Photo-john-levin

Mr John Levin

Global Metals
TD Securities
John Levin is the Head of Metal Sales & Trading – APAC at the Toronto Dominion Bank’s Singapore office. Prior to this role, he devoted seven years to leading precious metal sales for the ANZ banking group in his home country, Australia. Notably, from 2009 to 2011, John played a significant role on the management committee of the London Bullion Market Association while serving as the Head of Precious Metals Sales for HSBC Global Banking and Markets in the UK.

SBMA Secretariat-Fabian-Lew

Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

He has joined SBMA since February, 2022.

SBMA-margare-secretariat

Margaret Wong

BUSINESS DIRECTOR

Margaret Wong, Business Director at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

Described as resourceful and self-motivated, Margaret Wong brings a wealth of skills and experience to her role at SBMA, ensuring efficient operations and effective engagement within the precious metals community in Singapore and beyond.

SBMA-Albert-secretariat

Albert Cheng

Chief Executive Officer

Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA, represents the interests of the Association, and is responsible for all the legal and regulatory aspects of the work of the Association. He is the primary contact for regulators and government bodies on bullion market development.

Ms Pawan Nawawattanasub

Ms Pawan Nawawattanasub

CEO
YLG Bullion Singapore Pte Ltd

Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

SBMA-Shaokai-Fan

Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
World Gold Council
Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

SBMA-Committee-Alan-Liew

Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

SBMA-Committee-Nikos

Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.

SBMA-Committee-khun nuttapong

Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
Nuttapong Hirunyasiri is the CEO of MTS Gold Group, one of Thailand’s top 10 companies and top 3 bullion companies. He started MTS Gold Group’s first overseas office in Singapore and has been expanding the group business internationally. He focuses on product development and innovation for gold investment, with the aim of being a leader in providing the full suite of gold investment services in the ASEAN region.

SBMA Committee-Photo-Raman-Walia

Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

Raman is Executive Director and Head of Commodities Sales, APAC, for J.P. Morgan. He joined JPMorgan in 2008 in New York, moved to Singapore in 2011, and helped expand the precious metals business in the region. Raman has an MBA from Cornell University, and likes to travel in his spare time.

SBMA Committee-Photo-Andrew-Clarke

Mr Andrew Clarke

Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

Andrew Clarke is the Head of BGS (Brink’s Global Services) for Singapore, Indonesia, Malaysia and Brunei. He has held various leadership positions throughout his career in secure logistics and risk management with Brink’s, which started in Hong Kong in 2010. Andrew relocated to Singapore in 2018 to expand the precious metals line of business along with Brink’s portfolio of services and industries.

SBMA Committee-Photo-Kazuya-Naoki

Mr Kazuya Naoki

Head of Metals, Asia
ICBC Standard Bank Plc, Singapore Branch

Kazuya (Kaz) Naoki is the Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

SBMA Committee-Photo-Vinh-Nguyen

Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

SBMA Committee-KL-Yap

Mr KL Yap

General Manager, Singapore Refining Business Unit
Metalor Technologies (Singapore) Pte Ltd
KL YAP is the General Manager of Metalor Technologies (Singapore) Pte Ltd’s Singapore Refining Business Unit. He joined Metalor in 2013, initially in Refining Sales. In 2014, he became Refining Business Unit Manager, leading the development of a new precious metal refinery. KL was Vice Chairman of SBMA from 2017 to 2021, now serving as Chairman. With a degree in business commerce, finance, and marketing, he brings prior experience from refinery and heavy industries.