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Thailand’s Gold Market Updates

By Pawan Nawawattanasub, CEO, YLG Bullion Singapore

PAWAN NAWAWATTANASUB

PAWAN NAWAWATTANASUB is the CEO of YLG Bullion Singapore and the CEO 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, and is a SBMA Committee member.

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Our last two articles (published in Crucible #17 and #19) highlighted the challenges and problems Thailand’s bullion industry faced while navigating the Covid-19 crisis.

In fact, even before the pandemic started, our records showed a downward trend in physical gold demand from 2015 to 2019 (2015: 90.2 tonnes; 2016: 81.5 tonnes; 2017: 75.4 tonnes; 2018: 80.6 tonnes; 2019: 46.5 tonnes). Subsequently, experiencing the full impact of the Covid-19 in 2020, the country witnessed a massive wave of physical gold disinvestment.

ylg chart 01 1200px 72ppi com
Source: World Gold Council, data calculation by YLG

Throughout 2021, Thailand moved from net disinvestment to net positive investment due to the combination of a lower gold price and continued economic recovery. Annual gold consumer demand reached 36.7 tonnes, compared with net selling of 81.5 tonnes in 2020.

In 2022, while higher local gold prices and the Omicron surge have prompted many Thai investors to hold back their gold purchases, the government maintained its GDP growth outlook at 3.5–4.5% for the year. Moreover, as travel restrictions are relaxing globally, there is optimism that the Thai tourism industry will soon recover. Hence, we can expect a modest increase in Thai gold consumption for this year, provided that gold price stays under the US$2,000 per ounce level.

Typically, the volume of gold imports and exports depend on the movement of gold prices. In 2020, the country exported 243.795 tonnes of gold, an increase of 42.63% from 170.925 tonnes in 2019. Meanwhile, imports plummeted -15.51% to 132.979 tonnes. The rise of gold exports was a result of continued growth in the gold price globally during the year.

ylg chart 02 1200px 72ppi com
Source: Thai Customs Department, data calculation by YLG

A falling gold price is a factor that stimulates the buying of gold among investors, who hope to profit from future price appreciation. As a result, the quantity of imports has increased. Evidently, in 2021, the country’s gold imports rose roughly 14% to 151.466 tonnes. Meanwhile, exports slumped by -71.17% to 70.289 tonnes of gold.

ylg chart 03 1200px 72ppi com
Source: Thai Customs Department, data calculation by YLG

The main destinations of gold exports from Thailand in 2021 were Singapore (43%), Switzerland (17%), Hong Kong (13%) and Australia (5%), according to Thai customs data. On the other hand, the main sources of Thailand’s gold imports in 2021 were Switzerland (46%), Hong Kong (23%), Australia (9%) and Singapore (6%), as per Thai customs data.

All imports and exports of gold are VAT exempt. The standard rate of VAT is 10%, but the rate is currently reduced to 7% until 30 September 2023. Corporate tax is 20%.

Interestingly, according to the World Gold Council, the Bank of Thailand, the country’s central bank, was the largest buyer of gold in 2021. As a result, its gold reserves grew by 59%, from 90 tonnes to 244 tonnes, as it last bought gold in 2017. As a matter of fact, gold accounted for 6% of Thailand’s total reserves, the highest tonnage level recorded.

According to Bank of Thailand Governor Sethaput Suthiwartnarueput, gold achieves the critical objectives of reserve management, which include security, return, diversification and tail risk hedging.

ylg chart 04 1200px 72ppi com
Source: Thai Customs Department, data calculation by YLG
chart
Source: IMF IFS, Respective Central Banks, World Gold Council

In Thailand, the popular choice of physical gold investment is the traditional baht bars in various weights and shapes such as square, oval, round, rectangular, biscuit, boat and doughnut, with a purity of 96.5% & 99.99%.

Alternatively, many savvy domestic investors also trade gold futures via the Thai Futures Exchange (TFEX). The 50 Baht Gold Futures contract was launched in 2009. Since then, the good response to the contract has led the exchange to launch a smaller sized 10 Baht Gold Futures contract in 2010.

The TFEX gold futures contract is a non-physical delivery contract. It is cash-settled upon expiry based on a final settlement price that is derived from the London AM Fixing price for Loco London and the USD/THB fixing price (16.30 hrs. Bangkok time) on the last trading day.

To date, there are more than 7,000 gold shops and goldsmiths spread across numerous provinces around Thailand. However, many of these retail outlets and gold shops are relatively small-scale operations with limited capacity to handle large trading volumes. This situation is especially apparent after a sudden overnight movement in the international gold price.

As such, the larger flow of the activity will eventually have to channel to reputable and large-sized wholesale gold traders. However, there are only a few Thai gold trading firms that can handle substantial trading volumes, such as YLG Bullion International. And these wholesale gold traders have been actively trading in the domestic and international markets for more than two decades.

In Thailand, there are some regulatory requirements to fulfil before any gold traders can start importing and exporting gold. These gold traders must have already registered and fulfilled specific business requirements under the Ministry of Commerce, Revenue Department and Custom department.

Also, these traders must be a member of the Thai Gold Traders Association, which has significant influence in the domestic market. It represents the entire bullion community, often communicating with respective government agencies on trade regulations and policy implementation.

Gold
Source: IMF IFS, Respective Central Banks, World Gold Council

Summary

Gold has always been well-liked by the Thai people. And the traditional values of saving for rainy days has not been forgotten, even during crisis periods. This attitude to saving is also why in 2021, Thailand bounced back with a reasonable demand after disinvestment in the previous year.

Globally, we have witnessed runaway inflation as pent-up spending demand, coupled with supply chain disruption, pushed prices up. Furthermore, the ongoing war in Ukraine is also causing many economic shocks and impacts. Under these circumstances, gold will continue to be well sought after because of its safe haven and inflation hedging qualities. Therefore, we remain very bullish on physical gold investment in Thailand in the foreseeable future.

PAWAN NAWAWATTANASUB

PAWAN NAWAWATTANASUB is the CEO of YLG Bullion Singapore and the CEO 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, and is a SBMA Committee member.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.