Indonesia holds 1,800 tons of gold 'under the pillow,' says minister

Indonesia is sitting on an estimated 1,800 metric tons of unutilized gold, a staggering amount largely held privately and outside the formal financial system, according to Coordinating Minister for Economic Affairs Airlangga Hartarto. This "under the pillow" gold, as he described it, represents an estimated $252 billion (1 trillion Malaysian ringgit) in untapped economic potential.

Hartarto urged for a greater portion of this privately held gold to be integrated into the formal banking and financial system. He specifically mentioned the roles of state-owned pawnshops Pegadaian and Bank Syariah Indonesia (BSI) in facilitating this transition. "So, what is the task of Pegadaian or BSI with this $252 billion? Perhaps 20 percent of it shifts from being stored 'under the pillow' to financial instruments or banking instruments at BSI or Pegadaian," Hartarto stated during the Indonesian Bullion Markets Association (IBMA) launch in Jakarta.

The government hopes that channeling this dormant wealth into official channels will unlock its economic value. Currently, the amount of gold managed by financial institutions remains relatively small compared to the estimated 1,800 tons held outside the investment system. Pegadaian manages approximately 153 tons, while BSI handles around 20 tons, bringing their combined total to about 170 tons. For comparison, Bank Indonesia holds about 70 tons in gold reserves.

The initiative, based on data from the Indonesian Bullion Markets Association (IBMA), seeks to leverage this significant private asset for broader economic benefit. By encouraging individuals to invest their gold through formal channels, Indonesia aims to bolster its financial sector and potentially increase its national reserves.

“

So, what is the task of Pegadaian or BSI with this $252 billion? Perhaps 20 percent of it shifts from being stored ‘under the pillow’ to financial instruments or banking instruments at BSI or Pegadaian.