INTERNATIONAL ENTERPRISE SINGAPORE Singapore …/media/IE Singapore/Files... · shipping and storage of precious metals for ... Singapore is the government agency driving Singapore’s

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SingaporeAsia’s Global Precious Metals Trade Hub

INTERNATIONAL ENTERPRISE SINGAPORE

SINGAPORE

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Asia is Driving Global Demand For Gold Global investment demand in gold has more than doubled since 2009 to 1,377 tonnes in 2013, with East Asia and the Indian subcontinent accounting for more than 70% of global physical bar investment1.The sharp correction in gold prices in the second quarter of 2013 saw unprecedented levels of physical demand for the metal in Asia. Chinese and Indian consumers, encouraged by the price fall, increased their holdings of gold jewellery, bar and coin investments. Asia clearly is the driver of the rising global demand for gold, underpinned by growing household incomes and a deep cultural affinity for the metal.

1 Source: “Gold Survey 2014”, Thomson Reuters GFMS, 8 April 2014

1000

800

600

400

200

0

-200

80%

70%

60%

50%

40%

30%

20%

10%

0%

Rising gold physical bar investment in Asia

2009 2010 2011 2012 2013

Tonnes

India

China

Southeast Asia

Japan

Other countries

Asian % of demand

3

4

2,3 Source: “Gold Survey 2014”, Thomson Reuters GFMS, 8 April 2014

Singapore is at the Heart of Trade Flows As Eddie Listori, ANZ’s Global Head of FX, Rates and Commodities puts it, Asia is the “biggest time zone for the physical flow of gold and Singapore is strategically situated” to capture these flows. Singapore is not only located within a seven-hour flight radius to key demand centres of China, India and Southeast Asia, it is also in close proximity to 15.5%2 of the world’s mining supply of gold (Australia, Indonesia, Papua New Guinea, the Philippines). In addition, more than 50% of the world’s scrap gold comes from Asia3.

49.8% of world’s scrap gold comes from Asia

Australia, Indonesia, Papua New Guinea and the Philippines produced

Asian demand for jewellery and investment comprised

Singapore

469.2tonnes of mined gold in 2013

(15.5% of world mining supply)

2,434 tonnes in 2012

(63% of world demand)

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Asia’s Global Precious Metals Hub Wealth Management HubThe past decade has seen Singapore emerge as a global private banking centre. Singapore not only offers economic and political stability, it also has a strong, efficient and transparent legal and judicial framework.

Physical allocation of gold in the portfolios of wealthy investors has been growing, in contrast to the outflow on gold-backed financial products. Against the uncertain global macroeconomic backdrop, both private and institutional clients have been demanding for their physical gold to be stored in a neutral and alternate location.

Singapore is well-positioned to accommodate the growing demand for physical precious metals, riding on its reputation as a wealth management hub. This has resulted in the set-up of dedicated gold vaults by several bullion banks such as ANZ Bank, Credit Suisse, DBS, Deutsche Bank and UBS. In fact, this is UBS’s first gold vault outside Switzerland.

Singapore has the largest pool of private banking assets in Asia, with US$516 billion in 2011. “International Wealth Management Centre Rankings”, Deloitte Consulting, 2013

Deloitte Consulting “International Wealth Management Centre Rankings – Stability Ranking”, 2013

Wealth management centre

Monetary stability

1 Singapore 1 1 3

2 Hong Kong 2 4 1

3 Switzerland 4 2 2

Overall category ranking (weighted)

Financial stability

Political stability

Singapore is the world’s most stable wealth management hub

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Strong Government Support The Singapore Government is dedicated to making Singapore a precious metals trading hub. Since October 2012, investment precious metals (IPM) have been exempted from Goods & Services Tax (GST)4; These tax changes were enacted in recognition that IPM are essentially financial assets, just like other actively-traded financial instruments where supplies are GST-exempt as well as to facilitate the development of IPM refining and trading in Singapore.

There are no licensing requirements for the import/ export of metals, ensuring the free flow of such metals through Singapore with minimal hassle. In addition, approved refiners or consolidators will enjoy GST suspension on imports for inputs to the processing of IPM in Singapore5.

World Class Physical Infrastructure Beyond a competitive tax structure, Singapore’s infrastructure can support the expected uptick in gold trading activity.

To meet the regional demand for gold, Metalor Technologies has chosen Singapore to construct a gold refinery and bullion product manufacturing plant. In June 2013, Metalor Singapore cast its first kilo 99.99 bar thus officially starting its operations here.

On secure storage, the establishment of the Singapore Freeport in 2010 provided Asia with its own Fort Knox. Modelled after the Swiss Freeport, the facility is outfitted with cutting-edge security and is the only one of its kind in Asia. Located next to Singapore’s Changi International Airport, it offers 22,000 sqm of strong rooms and show rooms with direct access to the airport runway and 24/ 7 armed guards.

A wealth of secure logistics providers, including established logistics players Malca Amit, Brink’s and other service providers operate the vaults in the Singapore Freeport, providing experience and expertise in precious metal-handling. These companies offer tailor-made logistical solutions for shipping and storage of precious metals for investments banks, private banks and bullion dealers.

The Safe House, a subsidiary of Silver Bullion, operates a secured vault facility protected by armed auxiliary police with a segregated storage capacity for 600 tonnes of silver and 30 tonnes of gold in a UL Class 2 gold vault.

4 Investment precious metals (IPM) are defined as gold of at least 99.5% purity, silver of at least 99.9% purity or platinum of at least 99% purity; they must be produced by LBMA/LPPM-accredited refiners. Please refer to Annex 1 for more details.

5 Approved Refiner and Consolidator Scheme (ARCS). Please refer to Annex 2 for more details.

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Metalor Opens First Southeast Asian Refinery in Singapore

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What made Metalor expand its operations in Asia through a refinery in Singapore?As the largest share of bullion demand is in Asia, the region (especially Southeast Asia) experiences a structural deficit in precious metals, despite being a major producer. The gold bar sold in Singapore has been transported twice: the first time on its way out to Switzerland or Australia for refining and the second time on its way back as a finished product. Such an imbalance generates additional costs that can be minimised if the refining is performed regionally.

What are Metalor’s current plans for your Singapore refinery?We are expanding our Singapore refinery in stages: we are currently operating a refinery to treat 70 tonnes of gold scraps (carat grade of more than 70% gold) per year. We also are able to produce 2 tonnes of bullion products (1kg and 400oz bars) per week under the London Bullion Market Association’s “Good Delivery” status. In the near future, we will increase the capacity and capabilities of our refining process by upgrading our gold refining capacity to 3-4 tonnes per week, starting a silver refining capacity of over 2 tonnes per week and expanding our bullion manufacturing to include smaller cast bars as well as minted bars. Under the current plans, we expect the entire facility to be completed by 2016.

Gilles RobertCountry ManagerMetalor Technologies

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Private Banks

- Julius Baer- UBS

Singapore’s Precious Metals Trading Ecosystem

Banks

- ANZ- Barclays- Deutsche Bank- JP Morgan- Standard Bank- UOB

Traders/ Wholesalers

- INTL- Mitsubishi Corp RTM- MKS- Sumitomo Global Commodities- YLG Bullion

Refineries

- Kaloti- Metalor Technologies- Rand Refinery

Secure Logistics

- Brink’s Singapore- Certis Cisco- Malca Amit

Australia

New Zealand

Timor-Leste

BruneiMalaysia

CambodiaVietnam

Myanmar

Bangladesh

Nepal

Sri LankaMaldives

Mauritius

Madagascar

South Africa

Kenya

Ethiopia

Oman

Qatar

Bahrain

Turkey AzerbaijanGeorgia

HungaryAustria

Czech RepublicGermany

PolandDenmark

NorwayFinland

Sweden

Greece

ItalySpainFrance

Switzerland

United KingdomCanada

The US

Brazil

NetherlandsBelgium

Luxembourg

Saudi Arabia

United ArabEmirates

Egypt

Nigeria

India

LaosThailand

Taiwan

MacauHong Kong

Japan

South Korea

Russia

China

The Philippines

Singapore

Indonesia Papua New Guinea

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280cities connected to Changi International Airport

60country links

6,800 flights operate every week

106scheduled airlines

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Singapore’s Continues to be the World’s Easiest Place to do BusinessRecognised globally as one of the most competitive economies in the world

Economist Intelligence Unit “Hot Spots: Benchmarking Global City Competitiveness”, 2012

World Economic Forum“The Global Competitiveness Index”, 2013-2014

1

2

3

New York

London

Singapore

1

2

3

Switzerland

Singapore

Finland

The World Bank Group“Ease of Doing Business Report“– Trading Across Borders index, 2014

Acknowledged as the economy most open to and conducive for trading

World Economic Forum“Global Enabling Trade Report”, 2014

Singapore

Hong Kong

The Netherlands

1

2

3

Singapore

Hong Kong

New Zealand

1

2

3

Singapore ranked easiest place to do business for 8 years running “Doing Business”, World Bank Group, 2014

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International Enterprise (IE) Singapore is the government agency driving Singapore’s external economy. We spearhead the overseas growth of Singapore-based companies and promote international trade. Trade has always been the backbone of Singapore’s economy. In addition to promoting export of goods and services, IE Singapore also attracts global commodities traders to establish their global or Asian home base in Singapore. Today, Singapore is a thriving trading hub with a complete ecosystem for the energy, agri-commodities and metals & minerals trading clusters. Renowned worldwide for their dedication to quality and innovation, Singapore-based companies make ideal business partners. With our global network in over 35 locations spanning many developed and emerging markets, we connect businesses with relevant Singapore-based companies for their business expansion by:

• helping to identify and cultivate relationships with Singapore-based partners that have a pan-Asian or global presence • keeping companies abreast of the latest business trends and opportunities in Asia Visit www.iesingapore.com for more information.

Grow your Precious Metals Business in Asia Pacific with IE Singapore

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GST Exemption of Investment Precious MetalsInvestment precious metals (IPM) have been exempt of goods and services tax or VAT since October 2012. This is in recognition that IPM are essentially financial assets, just like other actively traded financial instruments (e.g. stocks, bonds) where supplies are GST-exempt, as well as to facilitate the development of IPM refining and trading in Singapore.

Criteria for exemptionTo qualify for GST exemption, the precious metal must meet all of the following criteria (a, b, c, d):(a) It is gold of at least 99.5% purity, silver of at least 99.9% purity or platinum of at least 99% purity

(b) For gold and silver, it must be produced by a refiner in the current or former “Good Delivery” list of the London Bullion Market Association (LBMA). For platinum, it must be produced by a refiner in the current or former “Good Delivery” of the London Platinum & Palladium Market (LPPM). If the refiner is not in current or former “Good Delivery” lists of LBMA (for gold and silver) and LPPM (for platinum), it needs to intend to and is endorsed by International Enterprise (IE) Singapore.

(c) Bears a mark or characteristic that is internationally accepted as guaranteeing its quality. An example is the hallmark of a refiner in the “Good Delivery” list of the LBMA/ LPPM stamped on the bar, ingot or wafer.

(d) Trades at a price based on the spot price of the precious metal it contains. To provide certainty to businesses, coins (excluding the proof, numismatic versions) that qualify as IPM are:

Permit requirements for importation of IPMA TradeNet® GST Relief and/ or Duty Exemption permit is required to be declared prior to the importation of IPM into Singapore if the CIF value of IPM exceeds S$400. For more details on permit requirements, please refer to Singapore Customs’ circular on “Exemption of Goods And Services Tax for Investment Precious Metals” at www.customs.gov.sg > News & Events > Circulars > 2012 Circulars.

Alternatively, you may choose from a list of third-party declaring agents provided on the Singapore customs website to declare your IPM permit.

For more information on the importation and exemption of IPM, please refer to the Inland Revenue Authority of Singapore (IRAS) e-Tax Guide “GST: Guide on Exemption of Investment Precious Metals (IPM)” at www.iras.gov.sg > Quick links > e-Tax Guides > Enhanced Search for e-Tax Guides.

Gold coins

(i) America Buffalo(ii) Australia Kangaroo Nugget(iii) Australia Lunar(iv) Austria Philharmoniker(v) Canada Maple Leaf(vi) China Panda(vii) Malaysia Kijang Emas(viii) Mexico Libertad(ix) Singapore Lion(x) United Kingdom Britannia*

Silver coins

(i) America Eagle(ii) Australia Kookaburra(iii) Australia Koala(iv) Australia Lunar(v) Austria Philharmoniker(vi) Canada Maple Leaf(vii) China Panda(viii) Mexico Libertad(ix) United Kingdom Britannia*

Platinum coins

(i) America Eagle(ii) Australia Koala(iii) Australia Platypus(iv) Canada Maple Leaf

*UK Gold/Silver Britannia minted from 2013 onwards

Annex 1

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Approved Refinery and Consolidator Scheme (ARCS)Conditions of eligibility for the ARCSTo be eligible for ARCS, you must satisfy the following conditions: (a) You must be a GST-registered business; You must be registered with the Comptroller of GST as a GST-registered person. Please refer to the e-Tax Guide on “Do I Need to Register?” for information on GST registration.

(b) You must be a qualifying refiner or consolidator; A qualifying refiner is one which satisfies the following requirements: (i) Accredited under the LBMA/ LPPM: On the current “Good Delivery” list of the LBMA (for gold and silver); On the current “Good Delivery” list of the LPPM (for platinum); In the case of new refiners in Singapore which have yet to attain the accreditation, they need to be endorsed of IE Singapore and intend to be on the “Good Delivery” list of LBMA or LPPM. The refiner must attain the accreditation on the “Good Delivery” list of LBMA/LPPM within the time period specified in IE Singapore’s endorsement. IE’s endorsement is dependent on the refiner’s willingness and ability to attain LBMA/ LPPM good delivery status in Singapore.

(ii) Makes or intends to make substantial supplies of newly-refined IPM or refining services of IPM. For this purpose, the refiner’s supplies of newly-refined IPM and/ or refining services for IPM must constitute more than 50% of its total supplies.

Example

A qualifying consolidator is one which consolidates or aggregates materials (for example, raw materials or scrap gold) to be directly: • supplied to a refiner that meets the requirements set out above, for the purpose of the refiner refining the goods into IPM; and/ or

• delivered to a refiner that meets the requirements set out above, under an arrangement with the refiner to refine the goods for him into IPM.

To access the latest document for the ARCS scheme administered by IRAS, please refer to the following link:www.iras.gov.sg > Quick links > e-Tax Guides > In the keyword search type “ARCS”

As percentage of total supplies

Supplies of newly-refined IPM (a)

Supplies of refining services for IPM (b) (a) + (b)

Qualify for ARCS?

Refiner A 70% 10% 80% Yes

Refiner B 25% 65% 90% Yes

Refiner C 35% 30% 65% Yes

Refiner D 10% 20% 30% No

Annex 2

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V2/Jun 2014

International Enterprise Singapore230 Victoria Street #10-00 Bugis Junction Office TowerSingapore 188024

1800-IESPORE (1800-4377673) local toll-freeT +65 6337 6628F +65 6337 6898www.iesingapore.com

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