Singapore has just announced a major policy shift to establish itself as the premier precious metals hub in Asia.
The core of this announcement is the removal of a 5% cap on how much physical gold and other precious metals certain investment funds can hold. This change applies to funds under Singapore's key tax incentive schemes (known as 13D, 13O, and 13U), effectively unshackling them to invest more heavily in physical bullion.
But this isn't just a tax rule change; it's a coordinated, three-part strategy. First, the cap removal encourages demand. Second, Singapore is launching its own gold clearing system called "Loco Singapore" by the end of 2026, making it easier to trade gold locally. Third, the Monetary Authority of Singapore (MAS), the central bank, will offer gold vaulting services by October 2026, providing a secure, sovereign-grade storage option.
The timing of this move is strategic. It comes when gold prices have been volatile and global investors have been pulling money out of gold-backed Exchange Traded Funds (ETFs). By making it easier to hold physical gold onshore, Singapore aims to capture and stabilize regional investment flows that might otherwise go to offshore markets like London or New York.
This is also a direct response to strong, consistent demand from central banks worldwide. With global central banks buying large amounts of gold, offering a top-tier vaulting service makes Singapore an attractive place for other countries to store their reserves. It’s a classic case of building the infrastructure to meet existing demand.
Ultimately, this policy is the culmination of years of groundwork. It builds on Singapore's massive S$6 trillion asset management industry, recent updates to anti-money laundering regulations, and a consistent ambition to be a global bullion hub. By removing a constraint put in place back in 2022, Singapore is signaling that it's ready to compete at the highest level.
- Glossary
- Investment Precious Metals (IPMs): High-purity gold, silver, platinum, and palladium bars or coins recognized for investment purposes, often exempt from Goods and Services Tax (GST).
- Loco Singapore: A term for the upcoming gold clearing and settlement system based in Singapore. "Loco" means "location," so it signifies that the physical gold is settled and cleared locally in Singapore, similar to the established "Loco London" market.
- 13D/13O/13U Schemes: Tax incentive schemes in Singapore designed to attract fund management companies and family offices by offering tax exemptions on specified income from designated investments.