Jakarta. Indonesian households are estimated to hold around 1,800 tons of gold worth approximately $252 billion, presenting a potentially vast source of growth for the country’s emerging bullion ecosystem, Coordinating Minister for Economic Affairs Airlangga Hartarto said on Thursday.

“There are 1,800 tons of gold being kept ‘under the pillow,’ and its value is extraordinary -- $252 billion,” Airlangga said at the launch of the Indonesia Bullion Market Association (IBMA) in Jakarta.

Airlangga said the substantial amount of privately held gold could become a new source of growth for Indonesia’s bullion industry if households were encouraged to shift some of their holdings into financial instruments.

Since President Prabowo Subianto launched Indonesia’s bullion banking services last year, state-owned pawnbroker Pegadaian has accumulated around 153 tons of gold worth approximately $20 billion, while Bank Syariah Indonesia (BSI) holds around 20 tons, according to Airlangga.

He said channeling even a fraction of privately held gold into financial instruments, Islamic banking products, or Pegadaian could significantly accelerate the development of Indonesia’s bullion ecosystem.

“This is a task for Pegadaian and BSI -- to attract that $252 billion in savings. If just 20% moves from ‘under the pillow’ into financial instruments, Islamic banking products, or Pegadaian, it would generate extraordinary growth in our bullion ecosystem,” Airlangga said.

Airlangga also compared Indonesia’s estimated household gold holdings with the official gold reserves of several major economies. He cited the United States as holding around 8,133 tons, China 2,331 tons, and India around 880 tons.

The government, he added, is continuing to promote downstream industrialization in precious metals to increase the value added from Indonesia’s natural resources.

Bank Indonesia, meanwhile, holds a relatively modest gold reserve of around 70 tons, Airlangga said, citing this as another reason for the government to accelerate the development of a domestic bullion ecosystem.

“The government continues to promote downstream industrialization. The president also highlighted bullion banking in his recent speech as something that will become a key pillar in the future, particularly in increasing added value in the mining and energy sectors,” Airlangga said.

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