Mr David Gornall, Chairman of the LBMA,
Ms Ruth Crowell, CEO of the LBMA,
Distinguished Guests from the Bullion Trading Community,
Ladies and Gentlemen,
Good morning. It is my great pleasure to join you this morning, at the opening of the London Bullion Market Association (LBMA) Singapore Market Forum. And to all our foreign guests who just flew in for the meeting, a very warm welcome to Singapore.
I would like to thank the LBMA for bringing this event here. The gathering of the bullion industry here sends a strong signal about Asia’s bullion growth story. Indeed, Asia accounts for more than 60% of global gold demand today, driven largely by consumer and investment trade flows.
Singapore as a Gold Hub
For Singapore, trade has traditionally been an important economic sector. We have always maintained a pro-business environment, political stability, an efficient trade infrastructure, as well as good partnerships with companies and countries. These factors have allowed us to develop into an established commodities trading hub, especially for energy, metals and minerals and agri-commodities. The trading community conducts substantive economic activities here, creating employment and contributing to the growth of our business services such as financial services, freight and warehousing services, as well as professional services.
To grow our trading sector, we have been actively exploring new, and high value-added clusters, with gold as a clear choice. With our close proximity to both demand and supply in Asia, I believe that Singapore is well-placed to support the bullion industry, with substantive mutual benefits. Our vision is that Asia can be a driving force to continue the growth of the bullion industry, and be a global leader in areas fundamental to the demand and trade in this region.
Enhancing the gold trade infrastructure in Singapore
To build Singapore as a precious metals trading hub, we took the critical first step to remove the Goods & Services Tax (GST) from investment-grade gold, silver and platinum produced by LBMA-accredited refiners in October 2012.
And to facilitate storage, we worked to bring in the Singapore Freeport, a state-of-the-art facility for the storage and transit of valuable items. This was set up in 2010. This is currently occupied by secured logistics companies such as Malca Amit and Brinks, which have fuelled the precious metals trade. Now, we are very pleased to welcome the entry of Metalor Technologies with its new world class bullion manufacturing and refining facility. Metalor Singapore will have the largest LBMA good delivery gold refinery in Southeast Asia and is expected to have an annual refining capacity of some 150 tonnes by 2016.
Beyond the physical infrastructure, we have also been working closely with key industry partners such as the World Gold Council (WGC) to deepen market development. We have also engaged the Singapore Bullion Market Association (SBMA) closely as it represents the bullion trading community in Singapore and serves as a landing point for precious metal companies that choose to grow their Asian businesses from Singapore.
A gold trading market in Singapore
What the bullion industry needs most is a vibrant and robust marketplace within the heart of Asia. Therefore, I am pleased to announce that with the World Gold Council, the SBMA, the Singapore Exchange (SGX), and four leading bullion banks, namely JP Morgan, Scotia Bank, Standard Bank and Standard Chartered, they will come together to create the world’s first exchange-traded, wholesale kilo gold contract. It will be listed on SGX and physically delivered in Singapore. With strong support from the Singapore Government, we expect this contract to commence trading as early as September 2014.
This is a timely development given the increased requirements for reference prices to be transparent. With SGX as the independent matching and clearing entity, this physically-settled contract will create a more transparent and efficient marketplace for the kilo bar trades. The exchange will also act as a centralised clearing house to reduce settlement risk among multiple counterparties.
Conclusion
Ladies and gentlemen, Singapore will continue to develop both the physical infrastructure and the financial architecture to create a gold market for the future. The creation of a common marketplace for physical trade in gold will benefit everyone, from suppliers to the end consumers.
To all delegates here today, I wish you a successful market forum ahead, and look forward to your active participation in this market. Thank you.