Indonesia launches bullion banks to boost economy
New gold-focused banks aim to create 800,000 jobs, strengthen GDP, and offer Sharia-compliant savings for the Muslim-majority nation
JAKARTA, Indonesia (MNTV) — Indonesia is set to launch two bullion banks, specialized financial institutions that deal primarily with gold and other precious metals, in a move expected to create 800,000 jobs and significantly boost the country’s economy, according to Minister of State-Owned Enterprises (SOEs) Erick Thohir.
Bullion banks typically facilitate gold trading, storage, and financing, playing a crucial role in the global gold market by providing liquidity and financial services related to precious metals.
He emphasized that the establishment of these banks could increase Indonesia’s gross domestic product (GDP) by Rp245 trillion ($16 billion) while strengthening the country’s gold ecosystem.
“The bullion banks will enable transactions such as gold deposits, trading, savings, and financing, which will drive economic growth to 8 percent,” he said in a written statement.
The initiative, set to be inaugurated by President Prabowo Subianto on February 26, addresses Indonesia’s lack of domestic gold storage facilities, which has led to a significant outflow of gold to foreign markets.
“We don’t have a bank for gold in Indonesia. As a result, our gold is often mined and sent abroad,” Prabowo said at the Presidential Palace.
Chief Economic Minister Airlangga Hartarto highlighted that the bullion banks will offer Sharia-compliant savings options, aligning with Islamic financial principles.
This makes gold an attractive investment for Indonesia’s predominantly Muslim population, particularly for saving toward religious obligations like the Hajj pilgrimage.
“Gold is a safe investment, free from currency fluctuations and bank interest, which is prohibited in Islamic finance,” Airlangga said during the Indonesia Economic Summit in Jakarta.
He added that gold’s steady value appreciation makes it a reliable asset in uncertain economic conditions.
The two bullion banks will be operated by Bank Syariah Indonesia (BSI) and state-owned pawnshop company Pegadaian, with financial support from Bank Rakyat Indonesia (BRI).
The banks will allow Indonesians to deposit, trade, and save gold domestically, reducing the need for overseas storage and trading.
Indonesia, one of the world’s top gold producers, extracts up to 60 tons of gold annually from mining operations in regions like Papua, North Sumatra, and West Java.
However, much of its gold is traded and stored abroad, primarily in Singapore and Switzerland. The new bullion banks aim to reverse this trend by keeping gold reserves within the country, thereby strengthening Indonesia’s financial system and reducing reliance on foreign markets.
Airlangga noted that the government is focusing on gold industrialization, including producing high-purity gold bars to enhance economic value.
“By establishing our own bullion banks, we aim to create a self-sufficient gold ecosystem, strengthen our reserves, and support the local currency,” he said.
The initiative is expected to not only bolster Indonesia’s gold reserves but also enhance its domestic trading system, providing a more stable economic foundation for the future.
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