ASEAN KEY DESTINATIONS
Singapore-based bullion retailer eyes Bruneian investors
SINGAPOREAN bullion retailer, Silver Bullion Pte Ltd, which recently launched a bullion-backed peer-to-peer loan platform, is keen to extend its services to Bruneian investors.
According to Vergel Villasoto, director of Silver Bullion, investors can lend or borrow money through this lending platform that was launched in Singapore early this month.
Silver Bullion, meanwhile, serves as a custodian. It will enforce the contract terms, store the bullion and monitor prices on behalf of the lender.
“We are aware of the investing and purchasing power of Bruneians, and that Singapore is a jurisdiction that locals (Bruneians) deem to be safe and stable (as well as a defence ally),” he said.
He said his company is eager to introduce its services to Bruneians who are looking for alternative to store their gold or silver bullion.
“Our main goal is to make known to Bruneians of the option of allocating some of their assets through us,” he said.
Villasoto said Silver Bullion’s lending platform is similar to that of Ar-Rahnu - the Bank Islam Brunei Darussalam’s micro financing scheme.
“We also allow gold and silver to be collateralised in our program. The lender would be a fellow customer whom we also verified,” he told The Brunei Times.
He added the loan coverage is conservative and is backed by bullion on a 2:1 ratio or 200 per cent.
“As for the percentage, someone storing 100,000 Singapore dollars worth of gold with us can only borrow 50,000 Singapore dollars. We deem this to be a very safe figure, as then prices of silver or gold would have to practically halve before it can be considered risky for the lender,” said Villasoto.
Other bullion financing programs that are not-peer-to-peer offer up to 90 per cent collateralisation.
But as commodity market prices can be extremely volatile, this could present high risk for the borrower.
“The borrower would then lose his bullion as we sell his gold and buy it from him to return the principal and interest to the lender. We do not want our customers to experience such a scenario as much as possible,” said Villasoto.
Borrowers would have to send the bullion to be stored within the company’s vault.
Villasoto said his company's lending programme is a standard offering to everyone.
“Anyone from anywhere in the world can participate, both to borrow funds - once you (borrowers) have bullion stored with us - or lend cash, which requires for you to send the funds to our segregated bank account,” he said.
Bruneians, however, may have to check if they have to report interest income on their tax returns or any other reporting requirements to Brunei’s finance authority, Villasoto said.
The company has so far facilitated over 40 lending contracts worth 1.5 million Singapore dollars.
Following a recent report on the rise of Bruneians stocking up on gold coins and bars as investment, the company believes this is the right move for investors.
Global economic events of late have affected many asset classes including commodities and a collapse in the financial markets can cause a run toward precious metals, Villasoto said.
He cited countries that have experienced such collapses or near loss of confidence in their currencies.
Venezuela, Greece, Cyprus, Iran and arguably Malaysia, have seen their people flocking towards tangible assets that can be fully owned or carried with them in times of war.
This rules out real estate as an option, said Villasoto.
“In this regard, we would like to share with you that we espouse the same philosophy that many Bruneians are applying. We encourage the ownership of gold and silver, stored in a safe jurisdiction, with minimum counterparty risk, outside of the financial system,” he said.
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