In the latest regulatory development, Malaysia has imposed a 10% import duty on certain inbound shipments of gold bars. This unexpected decision has jolted the nation’s gold trade, with effects felt since early May, as per anonymous reports from traders and dealers. Consequently, some shipments have been detained at customs or rerouted due to the absence of a corresponding rise in local gold prices, which rendered the imports unprofitable.
Bank Muamalat Malaysia, a local Islamic bank offering gold investment products, has stated that the imposition of a 10% import tax on bullion will inevitably be transferred to customers. This could lead to a considerable price hike for investors. For instance, purchasing a one-kilogram bar via a Malaysian bank after June 8 could cost approximately MYR45,000 (US$11,300) more than it would have a week before.
A representative from the Royal Malaysian Customs Department has noted that the Ministry of Finance plans to discuss the issue of “minted gold products” imports with industry leaders.
The value of gold surged to a record high earlier this year, stoking investor interest in the precious metal, including in Asia. In response to this trend, several Malaysian banks have debuted gold investment products over the past year. Furthermore, bullion logistics firm, Loomis AB, has established a vault near the nation’s capital to cater to the growing demand.
According to the country’s Department of Statistics, Malaysia imported around US$2.5 billion worth of non-monetary gold up until April this year.
This move by the Malaysian government mirrors a similar abrupt shift in import policies in India, the world’s second-largest gold and silver market. This change has yielded a domino effect across its metals and currency markets.
How has Malaysia’s imposition of a 10% import duty on gold bars affected the bullion trade?
This move has disrupted the bullion trade, with some shipments being held at customs or diverted due to the increased cost, which, without a corresponding rise in local gold prices, made the imports unprofitable.
What is the likely impact of this decision on customers?
Bank Muamalat Malaysia has indicated that the imposition of this import tax will eventually be passed on to the customers, leading to increased prices for investors.
Has there been a change in the demand for gold?
Yes, there has been a growing interest in gold, spurred by its record high value earlier this year. In response, several Malaysian banks have launched gold investment products, and bullion logistics company, Loomis AB, has opened a vault near the country’s capital.
