OJK: Establishment of Gold Bank in Indonesia is Urgent

December 15, 2024 | 08:10 pm

TEMPO.CO, Jakarta - Indonesia's Financial Services Authority or OJK said that the need to establish a gold bank in Indonesia is currently urgent. A gold bank is a form of bullion business activity that is currently being developed by OJK and the government.

The Chief Executive of the Supervisory Board of Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Services Institutions (PVML) of OJK, Agusman, explained the urgency of organizing bullion business activities.

Agusman said this was necessary considering Indonesia's position as a producer and one of the largest gold reserve owners in the world, but also as an importer to meet domestic gold needs.

With the existence of a gold bank, Indonesia will finally be able to record the value of its gold stock and include gold in its financial balance sheet.

Bullion business activities are now regulated in the Financial Services Authority Regulation (POJK) Number 17 of 2024 concerning the Implementation of Bullion Business Activities. This regulation will come into effect on October 18, 2024 and is a derivative of Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (UU P2SK).

"The establishment of this bullion business activity is a mandate of the P2SK Law and is considered urgent," said Agusman during a press conference on the results of the Monthly Board of Commissioners Meeting (RDK) which took place virtually on Friday, December 13, 2024.

According to the definition in POJK 17/2024, bullion business activities are business activities related to gold carried out by financial services institutions. The activities in question can be in the form of gold savings, gold financing, gold trading, gold custody, and/or other activities carried out by LJK.

The bullion business activity ecosystem is expected to facilitate the observation of state foreign exchange and play a role in bridging the supply and demand for gold needs of the community.

After issuing the POJK, the authorities are designing a roadmap for the development and strengthening of bullion business activities in Indonesia. OJK will also form a National Gold Council for the bullion business activity ecosystem.

Agusman estimates that the performance of the bullion business will increase in line with the development of the community's economy and the financial services sector in Indonesia. He said that PT Pegadaian, a subsidiary of PT Bank Rakyat Indonesia (Persero) Tbk, has applied for a bullion business license.

"We can say that PT Pegadaian has applied for a bullion business license to the OJK and is currently in the process in accordance with applicable regulations," he said.

To Be Completed in 2025

The government is targeting the establishment of a gold bank to be completed in the first semester of 2025. Coordinating Minister for Economic Affairs Airlangga Hartarto said the draft law on bullion has been submitted to the DPR to be ratified next year.

"We have submitted the law. We hope that in the first semester of next year it can be realized," said Airlangga when met after the Bisnis Indonesia Economic Outlook 2025 event held at the Raffles Hotel, South Jakarta on Tuesday, December 10, 2024.

Airlangga explained that various countries already have gold in their financial balance sheets at banks. With a gold bank or bullion bank, Indonesia will be able to do the same. In addition, Indonesia will be able to record the value of its gold stock.

"In the past, we only put our gold stock in the warehouse. And we only recorded the tonnage, not the value. Other banks, including in Singapore, many banks include their gold in their balance sheets," said Airlangga on a separate occasion at the SEZ Business Forum held at the St. Regis Hotel, South Jakarta on Monday, December 9, 2024.

This is the reason Indonesia does not get the full value of the gold produced by the domestic manufacturing industry. Airlangga explained that the jewelry industry usually only gets manufacturing costs, while the Chartered Market Technician (CMT) credentialing process and tolling or gold refining are carried out in Singapore.

In the midst of the process of establishing bullion business activities, Airlangga proposed to the OJK that BRI and PT Bank Syariah Indonesia Tbk or BSI could become gold banks. "I propose to the OJK, at least BRI, which is the holding of Pegadaian, as well as Bank Syariah Indonesia, can host bullion banks in Indonesia," said Airlangga.

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