By Shaun Djie, COO and Co-Founder of Digix,
Asia remains the largest gold consumption market in the world and within Southeast Asia specifically, the demand for gold is skyrocketing—as countries like Thailand and Indonesia continue to witness a surge in gold exports. Singapore’s favourable location in the heart of Southeast Asia ensures it is well positioned to become a dominant gold hub, but the factors behind Singapore’s leading status as a gold innovator go far beyond geography.
Singapore’s tax free status on precious metals positions it as an attractive destination for consumers, investors and businesses to purchase gold—contributing to a 6% export increase in July 2020 due to the surge in gold shipments.
With the economic uncertainty caused by the Covid-19 pandemic, weakened US dollar and ongoing geopolitical tensions, investors are continuing to flock to this shiny metal to protect their wealth—pushing the price of gold past USD $2000. However, despite an increased interest in gold, it is barely accessible to everyday consumers due to the high premiums associated with buying, insuring, storing and owning gold—placing it in the reach of only a handful of wealthier individuals.
As such, the inaccessibility to this metal caused gold shops in Singapore to witness a drop in customers of at least 30 percent as gold prices surged to record highs. In a democratic world, it shouldn’t be the sole privilege of professional investors and institutions to protect themselves from economic volatility.
Emerging technologies and digitisation initiatives within the gold industry have the potential to address the issue of accessibility that is plaguing the gold market right now—and Singapore has the potential to lead this transformation. Singapore is not only celebrated as a centre for gold, but also a fintech hub that drives digital innovation throughout the region. This unique combination enables the Lion City to pioneer digital innovations, such as digital gold, to transform and digitise the entire gold industry—democratising this precious metal for everyone.
The exponential growth of fintech innovation in Singapore is a result of progressive regulations such as Singapore’s Payment Services Act and a favourable technological infrastructure—cultivating the growth of emerging technologies and digital innovation. As an outcome, Singapore has experienced more than S$1.2 billion in fintech investments in 2019, more than double the investments from the year before, further showcasing the nation’s potential and growth.
Understanding that digitisation is crucial to future-proof the region’s economy, Singapore has further legitimised new technologies through grants, funding and piloting proof of concepts. One example is Singapore’s recent SGD $285 million grant that helps startups sustain innovation and entrepreneurship in this time of uncertainty.
The combination of Singapore’s position as a regional gold hub with the government’s progressive approach has spurred the growth of digital gold which places a traditional, physical asset within the digital realm—facilitating easier access for retail investors to purchase gold in increments, simplifying and democratising the process of investing in traditional gold markets.
However, anything placed in the digital realm is open to cyberattacks which has prompted businesses and authorities to explore blockchain technology due to it’s secure, transparent and immutable characteristics.
Organisations and governments in Singapore have been strong advocates of blockchain technologies—implementing the benefits of blockchain into its ecosystem through various initiatives such as the creation of Tribe Accelerator, Singapore’s first government backed blockchain accelerator. Such initiatives have played a key role in the development of digital gold, offering an alternative means for consumers and industry players to purchase this shiny metal in a manner that is secure, convenient and transparent.
As demand for gold continues to reach new heights, Singapore has the potential to pioneer innovation and transformation within the gold industry. It’s position as a gold hub coupled with the progressive regulatory environment will allow Singapore to set the global standard for gold innovation in the years to come.