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🇮🇩 Indonesia /Economy & Trade

Indonesia Holds 1,800 Tons of Gold 'Under Pillows,' Minister Says, Urging Formal Investment

From Tempo · () Indonesian

Translated from Indonesian, summarized and contextualized by DistantNews.

At a glance

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  • Indonesia holds an estimated 1,800 metric tons of gold, much of it stored privately outside the formal financial system.
  • The government aims to channel this idle gold into financial instruments, potentially worth $252 billion, to unlock its economic value.
  • While Indonesia's total gold holdings are substantial compared to some economies, only about 170 tons are managed by financial institutions like Pegadaian and BSI.

Indonesia possesses an estimated 1,800 metric tons of gold, a significant portion of which remains idle and is held privately rather than invested through formal financial channels, according to Coordinating Minister for Economic Affairs Airlangga Hartarto.

This privately held gold, described by Hartarto as being stored "under pillows," is estimated to be worth approximately $252 billion. The government is actively encouraging individuals to channel more of this wealth into bullion banking and other financial instruments, including those offered by state-owned entities like Pegadaian and Bank Syariah Indonesia (BSI). The goal is to unlock the economic potential of this substantial, yet largely untapped, resource.

So what are the duties of Pegadaian or BSI with this US$252 billion, maybe 20 percent moves from being placed under pillows to being placed in financial instruments or banking instruments at BSI or Pegadaian.

— Airlangga HartartoExplaining the government's goal to move privately held gold into formal financial instruments.

Currently, financial institutions manage a relatively small fraction of Indonesia's gold. Pegadaian oversees about 153 tons, and BSI manages approximately 20 tons, totaling around 170 tons. In comparison, Bank Indonesia holds about 70 tons in reserves. Hartarto highlighted that Indonesia's total gold stock, including private holdings, is considerable when compared to other major economies, citing figures for the United States (8,133 tons), China (2,331 tons), and India (880 tons).

The government is promoting downstream policies, including the development of a domestic bullion industry, to encourage Indonesians to manage their gold through formal financial channels. The recent establishment of the Indonesia Bullion Market Association (IBMA) is part of this broader strategy to develop a formal bullion ecosystem and increase the added value of the mining and energy sectors.

The President also mentioned in his speech yesterday regarding the bullion bank, so this bullion will become something relied upon in the future, especially to increase the added value of downstream in the mining and energy sectors.

— Airlangga HartartoDiscussing the government's focus on developing the bullion industry.
DistantNews Editorial

Originally published by Tempo in Indonesian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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