Indonesia Turns to Bullion Banks to Keep More Gold Wealth at Home

Pegadaian and BSI Take Gold Into the Financial System

Indonesia entered 2026 with its first bullion banks operating through PT Pegadaian and Bank Syariah Indonesia (BSI), part of a government effort to keep more of the country's gold wealth within its borders. The ambition reaches beyond selling gold bars: officials want domestic institutions to handle deposits, storage, trading and financing, while local refineries turn mining output into gold ready for investment and industry.

The scale of the opportunity is large. Indonesian households are estimated to hold about 1,800 tons of gold, much of it in homes and private safes. President Prabowo Subianto has projected that bullion services could add Rp 245 trillion, approximately $14.7 billion, to gross domestic product and create 1.8 million jobs. GDP measures the value of goods and services produced in an economy.

Gold is being given strategic importance alongside palm oil and nickel. Indonesia wants to move beyond exporting raw materials and become a centre for processing, trading and storing the precious metal. The launch combines two developments: global gold prices repeatedly reached records in 2025, and Indonesia acquired the ability to produce fine gold domestically.

Pegadaian, a state owned pawnshop company, and BSI, the country's largest Islamic bank, are the designated providers. Their services are intended to connect mines, refiners, jewellery businesses and individual savers through a domestic financial network.

Damar Latri Setiawan, Pegadaian's president director, described the banks as a way to bring gold management, storage, financing and trading together inside Indonesia. The initiative addresses a longstanding problem: a country with substantial gold resources was still dependent on imports of refined gold.

Record Prices Strengthen the Case for Change

Global gold prices repeatedly hit record highs during 2025, approaching $3,000 per ounce. Indonesia's domestic market also experienced a sharp rise, increasing the value of gold already held by households and businesses and strengthening interest in investment and trading.

Antam gold bars rose from Rp 1.52 million per gram on January 2, 2025, to Rp 2.50 million on December 31. The increase was Rp 980,000 per gram, approximately the Rp 1 million, or $60, rise described across the year. Based on those two prices, the gain was about 64 percent.

PT Aneka Tambang, known as Antam, is the state owned miner receiving newly refined domestic gold from Freeport Indonesia. Its role connects Indonesia's expanding refining capacity with the market for investment bars.

Higher prices give the government a favourable setting for its plans, but the economic goal extends beyond the price of the metal. Indonesia wants more of the work surrounding gold, including refining, secure transport, storage and financing, to happen locally. Those activities provide routes through which gold can support businesses and employment.

Freeport Supplies Gold Refined in Indonesia

Freeport Indonesia, which operates one of the world's largest gold mines at Grasberg, has successfully processed raw ore into gold bars with a purity of 99.99 percent. Fine gold means gold refined to a very high level of purity, suitable for use in investment bars and other products.

Just weeks before the bullion banks were launched, Freeport delivered its first batch of domestically produced fine gold to Antam. The shipment weighed 125 kilograms and marked a step in Indonesia's effort to carry out more processing at home instead of sending materials abroad.

Freeport Indonesia processed approximately 12.56 tons of anode slime at its PT Smelting subsidiary, producing 189 kilograms of gold bars. Anode slime is material left during metal refining that contains valuable metals which can be recovered through further processing.

Tony Wenas, Freeport Indonesia's chief executive, highlighted the purity of the gold and the scale of the operation. Freeport and Antam also signed a sale and purchase agreement lasting five years and covering 30 tons of gold, with an estimated value of $12.5 billion. The agreement is intended to secure a steady supply of domestically refined gold for the developing financial network.

How the Gold Network Took Shape

Indonesia's bullion banking initiative brings together legislation, financial regulation, refining and new banking services. The sequence matters because keeping gold in the country requires both institutions able to handle it and facilities able to produce the refined metal.

The main developments span several years:

• 2023: Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, known as UU P2SK, established the legal foundation for bullion banking.
• 2024: The Financial Services Authority, or OJK, issued Regulation Number 17 of 2024 governing bullion business activities.
• 2025: Global gold prices repeatedly reached records, while Antam's domestic price rose from Rp 1.52 million per gram on January 2 to Rp 2.50 million on December 31.
• Before the bullion bank launch: Freeport Indonesia delivered 125 kilograms of domestically produced fine gold to Antam.
• By late November 2025: Pegadaian's gold assets under management had reached 132.3 tons.

Pegadaian and BSI had received permits by January 3, 2026. An exact date for the launch was not given. The government has indicated that other financial firms could receive licences if they meet the requirements.

Bringing Household Gold Out of Private Safes

Indonesian households hold an estimated 1,800 tons of gold, much of it outside formal financial institutions. Minister of State Owned Enterprises Erick Thohir said these holdings had previously been recorded only as tonnage and were absent from any bank's financial balance sheet, the record of what an institution owns and owes.

Thohir described the economic issue in these words:

"In other words, they have not been monetized," Thohir said.

Monetizing gold means bringing it into financial arrangements where it can support saving, borrowing or business activity. The government's aim is to encourage people to deposit their gold with institutions rather than leave it unused in private storage.

Officials expect this process to support foreign exchange reserves and provide a buffer for currency stability. Foreign exchange reserves are assets held to help a country meet payments abroad and manage pressure on its currency. The proposed benefit comes from keeping more gold and related financial activity within Indonesia and reducing spending on imports.

Prabowo also drew attention to gold leaving the country. A substantial portion of Indonesian production had been exported or held overseas because domestic storage and financial infrastructure were insufficient. At the launch, he described Indonesia as a rich country that had only just recognised its wealth and said annual gold production had risen from 100 metric tons to 160 tons.

What Customers Can Do With Bullion Banks

Pegadaian has expanded from retail gold investment into a wider set of bullion services for individuals and companies. These include gold deposits, loans for working capital backed by gold, trading in physical gold and custody services.

Working capital is the money a business needs for everyday costs, such as materials and wages. A loan backed by gold lets a borrower use the metal as security for financing. Custody means an institution stores and safeguards gold for its owner.

Pegadaian's gold assets under management had climbed to 132.3 tons by late November 2025. That figure shows the amount of gold it was managing as its role expanded within the new system.

BSI is directing its bullion services toward religious and ethical finance. Its products include gold savings accounts intended for Hajj and Umrah expenses, allowing customers to build savings for religious pilgrimages through an asset backed by gold. The approach follows Sharia principles and serves Indonesia's large Muslim population.

The two institutions therefore address different customer needs within the same broader programme. Pegadaian combines retail and corporate services, while BSI connects gold saving with Islamic finance and pilgrimage planning. Both are intended to give customers formal ways to hold and use gold within Indonesia.

The Government's Growth and Employment Targets

Prabowo has projected that bullion services could contribute Rp 245 trillion, or about $14.7 billion, to GDP and generate 1.8 million jobs. Some studies put potential employment at 800,000 jobs, below the president's figure. The estimates share an expectation that the sector could become a substantial source of employment.

Thohir has also suggested that the initiative could help drive economic growth to 8 percent. He described benefits reaching beyond banking employment, including savings in foreign exchange, more competitively priced raw materials for jewellery businesses and new financing options for mining companies.

Mining companies could obtain project financing or enter forward hedge contracts directly with local banks. A forward hedge contract allows a business to agree terms for a future transaction, helping it manage the risk that prices will move before it sells or buys gold.

Indonesia also expects domestic processing and management of refined gold to reduce reliance on imports. The projected saving is approximately Rp 200 trillion in foreign exchange previously spent importing raw materials for gold bars. The government's strategy links this saving with keeping more processing, commercial activity and financial services inside the country.

Economists Look for Links to Everyday Business

Wisnu Nugroho, an economist at Gadjah Mada University (UGM), has cautioned that bullion banking may not immediately increase real economic activity. He sees it as more closely connected to financial deepening, meaning a wider range of financial services and greater use of them, than to directly increasing production.

Wisnu cited Indonesian gold reserves of about 3,600 metric tons, which he described as exceeding those of China and reported United States holdings. He also used an annual production figure of around 100 metric tons, below major producers such as Australia and Canada. Prabowo's launch statement put annual output at 160 tons following an increase from 100 tons.

Wisnu argued that countries with large gold reserves gain economic strength through diversified economies and strong financial institutions, rather than through gold alone. In his assessment, the gap between Indonesia's substantial reserves and more modest annual production points to gold's role as a strategic financial asset rather than an industrial input.

Gold reserves can help provide a buffer for currency stability, Wisnu said, while efficient financial systems are needed to turn that stability into broader economic growth. His concern focuses on how money and assets reach businesses that produce goods, provide services and employ people.

Diny Ghuzini, another UGM economist, called for stronger connections between finance and the real economy. She identified trading, refining, logistics, leasing and financing for precious metals as possible sources of growth. These activities give the banks routes to support work beyond the ownership and storage of gold.

Public Trust Will Shape Gold Deposits

Gold has a deeply rooted place in Indonesian cultural traditions. Families view it as a secure store of wealth, and it is often passed from one generation to another. Moving it from a home safe to a bank vault therefore involves both a financial decision and a change in familiar habits.

Pegadaian and BSI will need to earn the confidence of people who prefer physical possession. Similar efforts in Turkey and India have produced mixed results, with many citizens choosing to keep gold at home rather than deposit it with banks.

Indonesia is incorporating blockchain enabled tracking and digital certification systems to improve security and transparency. Blockchain tracking uses a shared digital record to follow transactions or assets, while digital certificates provide an electronic record of information about the gold.

Public education campaigns are also considered necessary to explain formal gold banking, including competitive interest rates on gold deposits and the security of institutional storage. The broader challenge is to make the services attractive enough for households to place part of their existing wealth in the financial system.

Rules Set a High Threshold for Entry

Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector provides the legal foundation for the initiative. The law mandates financial reform and identifies gold banks as a mechanism for strengthening the financial sector.

OJK Regulation Number 17 of 2024 sets out the bullion business framework, covering deposits, financing, trading and custody. Financial firms seeking to operate as bullion banks must hold minimum capital of Rp 14 trillion, approximately $850 million.

The capital threshold is intended to limit entry to financially robust institutions capable of managing valuable customer assets. The framework also requires prudent operations, risk management, transparency, strict programmes against money laundering, consumer protection and reliable reporting.

Those requirements matter because bullion banking combines the handling of physical gold with financial obligations to customers. Institutions need to safeguard the metal, maintain accurate records and manage the risks associated with financing and trading.

Expansion Depends on a Connected Domestic Market

Pegadaian and BSI are the only institutions that have received permits so far, but the government has indicated that further licences could be issued to firms meeting the capital requirements. Expansion would bring more participants into a market intended to retain gold and the value created around it in Indonesia.

The Indonesia Bullion Market Association (IBMA) has also been formed through an initiative involving state owned enterprises including Pegadaian, Freeport, Antam and BSI. The association is intended to help develop industry standards and support collaboration across the gold network.

Indonesia's strategy connects several parts of the same chain: mines supply material, refineries produce fine gold, Antam receives domestic output, financial institutions provide services, and households and businesses decide whether to use them. The Freeport and Antam agreement and Pegadaian's growing gold holdings give that strategy a concrete starting point.

The central task is to turn retained gold into useful economic activity through public trust, effective regulation and financing that reaches businesses. Indonesia aims to capture more wealth at home, reduce exposure to external shocks and provide a possible model for other countries rich in commodities that want to gain more value from their resources.

Key Points

• Pegadaian and BSI are Indonesia's first licensed bullion service providers, offering ways to deposit, store, trade and finance gold domestically.
• Households are estimated to hold 1,800 tons of gold, much of it in homes and private safes.
• Freeport Indonesia has produced gold with 99.99 percent purity and delivered an initial 125 kilograms to Antam.
• Freeport and Antam signed an agreement lasting five years covering 30 tons of gold, valued at an estimated $12.5 billion.
• Antam gold rose from Rp 1.52 million per gram on January 2, 2025, to Rp 2.50 million on December 31.
• Prabowo projected Rp 245 trillion in GDP contributions and 1.8 million jobs; some studies estimated 800,000 jobs.
• Bullion banks must hold at least Rp 14 trillion in capital and meet requirements for risk management, reporting and consumer protection.
• UGM economists stressed the need to connect gold finance with trading, refining, logistics and other productive activity.