Why Singapore Is Asia’s Global Precious Metals Hub
Before we lay out the reasons behind Singapore’s position as Asia’s global hub for precious metals, let’s take a look at the situation in Asia in the past decade. Namely, Asia is currently driving the global demand for gold, with global investment having doubled between 2009 and 2013 alone. Moreover, the trend isn’t showing any signs of reverting. The investment came with (or was most probably caused by) the drop in prices of physical gold.
The trend spread from the region to the world. Wealthy investors around the globe started to allocate physical gold and other precious metals in their asset protection portfolios, and also to look for store it in a safe jurisdiction. Quickly evolving as a global private banking center and a wealth management hub, Singapore soon started to be the preferred choice.
Singapore’s strategic position
With Asia being conducive to the biggest physical flow of gold worldwide, Singapore’s strategic position in the region came to play. Singapore’s strategically situated to capture the physical flows of gold primarily, followed by silver and platinum.
One of the most important factors is its close proximity to around 15% of world’s gold mining supply centers such as the Philippines, Papua New Guinea, Australia and Indonesia. Additionally, almost 7,000 flights operate every week in Singapore with 280 cities connected to Changi International Airport.
Singapore as a private banking centre
The reasons behind Singapore’s rapid development as a global wealth management hub are manifold. Firstly, Singapore is politically stable and economically very prolific, with strong governmental support and logistics for its economic development. In addition, its legal and judicial systems are highly transparent. All of these factors influence the way Singapore is perceived as a trustworthy environment for investment, ranking higher than Hong Kong and Switzerland.
Moreover, Singapore welcomes foreign investments through a set of laws, rules and regulations that are beneficial for foreign wealth builders and high net worth investors. This especially applies to investment precious metals. As a result, a number of gold vaults by bullion banks were set up, including ANZ Bank, Credit Suisse, DBS, Deutsche Bank and UBS.
Singapore government support
With investment precious metals (IPM) being recognized as financial assets, the Singapore Government exempted IMPs from Goods & Services Tax (GST). Consequently, the change in taxation propelled IPM refining and trading in Singapore. The import of investment precious metals, including some investment grade gold and silver bullion, is tax-free, with both importers and IPM refiners benefiting greatly from the GST suspension.
In 2013, Metalor Technologies opened the first Southeast Asia refinery – Metalor Singapore. Since Southeast Asia has established itself as a major global producer of precious metals, it wasn’t viable to transport it to Switzerland or Australia for refining and then back to Singapore as physical gold or silver (gold and silver bars, coins, etc.). With the opening of a regional refinery, unnecessary transportation costs were slashed.
Singapore’s physical infrastructure and logistics
In order to create the infrastructure fitting for the uptick in precious metal trading, Singapore Freeport was established in 2010. One of its kind in Asia, Singapore Freeport was modeled after the Swiss Freeport. Its cutting-edge security and location right next to Changi International Airport make Singapore Freeport a pivotal place for precious metals trading in the region. It also reaffirms Singapore as a global precious metals hub.
Additionally, Singapore is home to warehouses awarded a bonded warehouse status for IPM by the Singapore Customs Office. Silver Bullion’s The Safe House (TSH) is one of these bonded warehouses, serving as the ‘’all-in-one’’ warehousing and logistics partner. The logistics service includes handling all customs procedures in-house. Having the bonded warehouse status, The Safe House abides by strict safety and security regulations.