Forging Indonesia's future as a global gold reserve hub

Jakarta (ANTARA) -

In the midst of geopolitical turmoil, trade wars, economic sanctions, and the fragmentation of the global financial system, gold has re-emerged as a strategic asset sought by global central banks.

In the past five years, gold purchases by global central banks have reached a record high since the end of the Bretton Woods system in 1971.

Data from the World Gold Council showed that global central bank gold purchases have exceeded 1,000 tons per year for three consecutive years between 2022 and 2025. This phenomenon shows that gold is being viewed as an anchor of stability amid global economic uncertainty.

However, the key development lies not only in the accumulation of gold reserves, but also in the redistribution of storage locations. For decades, central bank gold was largely held in New York, London, and Switzerland. Currently, this concentration is now gradually showing diversification.

Some countries are choosing to repatriate their gold reserves, while others are seeking alternative storage locations that are closer, safer, neutral, and offer greater economic stability. In this context, Singapore has emerged as a new player offering international gold storage services.

This raises the question of why Indonesia is not taking advantage of the opportunity, even though it possesses capital comparable to that of its regional peers. As the largest economy in ASEAN and a member of the G20, Indonesia has a Gross Domestic Product (GDP) of over US$1.6 trillion by 2025.

Macroeconomic stability is relatively well maintained, with inflation around 2–3 percent, economic growth above 5 percent, and foreign exchange reserves reaching around US$145 billion by May 2026.

In terms of natural resources, Indonesia is also one of the world's major gold producers, with production ranging from 100–130 tons per year through major mining operations such as PT Freeport Indonesia and PT Aneka Tambang Tbk.

Despite being a major gold producer, Indonesia has not yet become a center for international gold trading or storage. The added value of the gold sector is still largely captured by global financial hubs such as London, Zurich, Dubai, and Singapore, where Indonesia as a gold exporter has yet to fully develop its gold financial ecosystem.

Furthermore, the advantages of serving as an international gold storage hub extend well beyond custody fee revenues. Countries entrusted with holding other central banks’ gold also gain substantial reputational benefits, reflecting global confidence in their institutional quality, political stability, legal safeguards, and central bank credibility.

A prominent example is Singapore, a city-state of approximately 735 square kilometers that possesses no substantial gold reserves.

However, through a combination of favorable regulations, strong legal certainty, world-class infrastructure, and a neutral geopolitical position, Singapore has successfully transformed into one of the largest gold trading and storage centers in Asia.

The country has also built various international-standard vaults to attract central banks, sovereign wealth funds, and institutional investors from various countries.

Indonesia actually holds a number of advantages. These include a much larger economy, domestic gold reserves supported by a robust mining industry, a strategic location on a global shipping route between the Indian and Pacific Oceans, political stability, and a respected central bank in the region.

However, this goal requires a well-planned and consistent strategy.

The first step is to strengthen Bank Indonesia's credibility as a world-class monetary institution. A central bank aspiring to become an international gold custodian must be equipped with an unimpeachable reputation.

Policy transparency, institutional independence, and strong governance must be upheld. Countries depositing their gold need assurance that their assets are protected from political risk and government interference.

This effort must be followed by the establishment of an international-standard gold vault infrastructure. Central bank gold storage goes beyond the provision of an underground warehouse.

It requires facilities with multi-layered security systems, cyber protection, 24-hour surveillance, advanced identification technology, and independent audits that meet international standards. The initial investment is substantial, but the long-term benefits are far greater.

The third step is to develop a national bullion market. Currently, Indonesia's gold trade is relatively shallow compared to Singapore or Dubai. Indonesia must strengthen the role of gold exchanges, clearing agencies, internationally recognized refineries, and a globally recognized certification system.

The fourth step is to ensure legal certainty and competitive regulations. Many nations prefer Singapore not because it offers cheaper storage, but due to the high level of legal certainty the country holds.

This way, Indonesia needs to provide clear legal protection for foreign gold ownership, including a credible dispute resolution mechanism that is trusted by the international community.

The fifth step is to strengthen Jakarta's position as an international financial center. The development of a modern financial region, the integration of cross-border payment systems, and human resources improvement in the financial sector are key parts of this grand strategy. Becoming a gold storage center requires a robust financial ecosystem.

Beyond the direct economic gains, there are far greater strategic advantages. If Indonesia succeeds in becoming a gold storage hub for other countries, its position within the global financial architecture would be significantly strengthened.

Countries entrusted with storing strategic international assets typically enjoy lower risk premiums, reduced borrowing costs, and enhanced investment attractiveness.

This kind of international trust could ultimately help strengthen the rupiah and expand Indonesia's role in regional monetary cooperation. In the long term, Indonesia could also become the largest gold and precious metals trading center in Southeast Asia, complementing its role as the region's largest economic power.

In this measure, the country must compete with Singapore, Dubai, Hong Kong, and Switzerland, which already have international reputations. However, history shows that the world's financial centers always change with shifts in the global economy. As the world's economic center of gravity shifts to Asia, opportunities for Indonesia to play a larger role also arise.

Singapore’s success story taught a key lesson showing that modern economic strength is no longer solely determined by the possession of natural resources. The greatest added value lies in mastering the financial services, logistics, and trade ecosystems surrounding those resources.

Singapore is a testament that a country with no gold mines can emerge as a global hold hub.

On the other hand, with its substantial gold reserves, Indonesia is at risk of only being a raw material supplier without the establishment of a supportive financial ecosystem.

Therefore, the vision of positioning Indonesia as an international gold storage center should not be regarded as an unrealistic aspiration. With ASEAN's largest economy, strategic geopolitical position, strong foreign exchange reserves, a thriving gold industry, and maintained macroeconomic stability, Indonesia has the necessary capital to realize the target.

In an era when trust is the most valuable currency in the global financial system, Indonesia has the opportunity to position itself as a gold producer and a custodian of global gold.

If effectively utilized, the resulting benefits would go beyond financial service income to include greater reputational capital, increased economic resilience, and a more established role as a major financial center in Asia.

*) Dr. Aswin Rivai, Economic Observer and Lecturer at the Faculty of Economics and Business, UPN Veteran, Jakarta

Disclaimer: The views and opinions expressed here are those of the author and do not necessarily reflect the official policy or position of the ANTARA News Agency.

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Translator: Dr. Aswin Rivai, Resinta Sulistiyandari

Editor: Anton Santoso

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