Jakarta. Indonesia has appointed state-run entities Bank Syariah Indonesia or BSI and Pegadaian to run the country’s first gold bullion banks, according to senior minister Airlangga Hartarto.

President Prabowo Subianto revealed early this week he would launch resource-rich Indonesia’s first-ever bullion bank on Feb. 26. Prabowo said at the time that Indonesia had been massively mining its gold, but many of the mined precious metal flowed overseas.

A bullion bank specializes in the trade and management of precious metals, including gold. Its services include gold deposits and trading, to name a few. BSI is the entity that came as a result from the sharia units of three state-owned sharia banks: BRI Syariah, Bank Syariah Mandiri, and BNI Syariah. Pegadaian is the state-run pawnbroker and a subsidiary of BRI.

“We have assigned Pegadaian and BSI to run this gold trading and banking. A bullion bank is important. In every crisis, there are only two safe haven instruments: the American dollar and gold,” Airlangga told the Indonesia Economic Summit in Jakarta on Tuesday.

Both BSI and Pegadaian have already secured the necessary permit at the Financial Services Authority (OJK) to run the bullion activities with the pawnbroker being the first one to get approved. The OJK permit allows Pegadaian to offer services such as gold deposits, gold working capital loans, corporate gold deposit services, and gold trading. The company recently reported that its gold deposit balance on its Pegadaian Digital app had amounted to 118 kilograms as of Jan. 2025. Gold savings had also totaled 10.33 tons by December 2024. 

BSI has just gotten OJK’s approval early this month. The bank announced that its gold business was worth around Rp 12.8 trillion ($786.7 million) by the end of 2024, up nearly 78.2 percent year-on-year. BSI also lets its customers purchase gold in installments. BSI revealed that its gold installment financing had reached Rp 6.4 trillion, up by 177.4 percent. 

Indonesia is already home to a gold refinery belonging to mining giant Freeport. This facility, which is situated in Gresik, can produce up to 60 tons of gold annually.

According to Airlangga, the bullion activities in the sharia-compliant BSI can help people to save money for Hajj. Hajj-goers typically have to wait for years before they can make the pilgrimage. Gold can be a safe investment and its price will likely remain stable in the long run by the time the pilgrims fly to Mecca.

Indonesia is the world’s largest Muslim-majority country, and will send 221,000 people to go on the Hajj pilgrimage in 2025. Going on Hajj can cost a person Rp 89.7 million. The government subsidizes the Hajj expenses and “only” requires a pilgrim to pay Rp 55.4 million out of their own pockets.