4th September 2019
Kinesis, ABX and JFX Partner to create Sharia Gold Contracts in Indonesia, Asia’s first Sharia-compliant allocated physical bullion exchange.
London 16 July 2019: The combination of Indonesia’s industry-friendly climate and latest legislative pronouncements relating to gold have opened doors for Kinesis to develop a Sharia gold solution.
In partnership with the Allocated Bullion Exchange (ABX) and Jakarta Futures Exchange (JFX) unique partnership opportunities are underway with Indonesian national organizations to develop several projects for the benefit of Indonesian citizens.
It is within this environment that the JFX Sharia Gold (JSG) contracts have been developed and powered by ABX, to enable the physical trading, vaulting, vault management and logistics of Shariah compliant physical bullion. This development is in close collaboration with Kliring Berjangka Indonesia (KBI), the Indonesian government clearinghouse corporation and POS Indonesia, the government postal service.
JSG contracts will utilize ABX’s MetalDesk exchange technology, KBI as the central clearing party (CCP), JFX as the Exchange Partner, Kinesis/OZL as the Indonesia vaulting company, PT POS, world’s third-largest postal service, as logistics provider and ABX as physical bullion agent for the project. Prior to Kinesis/OZL Indonesian vault being operational, ABX vaulting partners in Singapore will be utilised.
Today, Indonesia has a population of over 264 million, with over 65% of the population being either “unbanked” or “under-banked”.
However, the vast majority of Indonesians have active internet and mobile access. Indonesia currently sits as the largest economy in Southeast Asia, the world’s ninth largest economy and one of the fastest-growing emerging markets in the world. With a burgeoning middle class and a median population age of under 35 years, Indonesia has the infrastructure to become a hub for technological and financial innovation.
Currently, gold is a major asset for saving and investment in the region, as it’s historically seen as one of the safest and most reliable stores of value available. With 225 million (87%) of the country’s citizens following the Islamic faith, many follow Sharia Law in which gold is proclaimed a legal investment, which increases the local demand for the asset.
PT POS Indonesia is the state-owned postal service in Indonesia and third-largest postal service in the world, in terms of number of offices and sales outlets (over 58,000). In addition to delivering postal services, they are also the largest non-bank financial institution in Indonesia, providing payments, cross border remittances, micro-loans and other financial services.
Technology partnerships positioned to deliver white-labelled Kinesis and ABX products into the hands of millions.
PT Bullion Ecosystem International (BEI), an Indonesian e-commerce and financial technologies company provides mobile applications for gold trading, collateral gold finance and Shariah gold financing in collaboration with major Indonesian banks and other large commercial enterprises. Both Kinesis and ABX have cooperation agreements in place with BEI.
BEI has exclusive agreements in place with PT POS – Indonesia government postal service, JFX, Nahdlatul Ulama (NU) – a 100+ million-member organisation and others, to provide white-labelled, branded versions of mobile app and e-commerce platform.
These branded mobile apps will be the exclusive mobile method for clients of these organisations to trade JSG contracts with integration onto ABX MetalDesk. ABX has agreed on the commercial terms for JSG participants. Kinesis has agreed on vaulting terms when the Indonesia vault becomes operational.
BEI and their partners have also agreed to integrate with the Kinesis digital gold (KAU) product onto the PT POS, NU and JFX branded MetalGo apps, to facilitate KAU trading as well as Minting via the Kinesis Mint and mobile banking interfaces creating greater access to the Kinesis system.
Thomas Coughlin, CEO Kinesis & ABX states “The vision of delivering a Sharia-compliant gold contract in Indonesia is starting to become a reality. Working closely with our key partners JFX, NU, and technology provider BEI as well as integration with the Kinesis Indonesia vault project, we aim to deliver a solution that satisfies the regulatory requirements of Sharia Law.
With our vast technological expertise, having developed and run our institutional metals exchange, MetalDesk, at the Allocated Bullion Exchange (ABX) for over 9 years, as well as the tremendous reception and take-up of the Kinesis Monetary System, we are confident in delivering a seamless solution for the purchase and allocation of Sharia gold contracts in multiple formats for investors all across Indonesia”
Stephanus Paulus Lumintang, President Director JFX comments “JFX is continuously striving to provide the best services in the exchange industry and in particular, to support the local gold market. With that in mind, it’s become clear how JFX, ABX and Kinesis together can be of incredible benefit to Indonesia and Indonesian citizens across all spectrums of society.
The recent developments within the region regarding blockchain technology and related regulation has created the environment for significant collaboration between JFX and Kinesis to explore and develop exciting digital-related physical gold products and services, including mobile banking applications.”
Iman Pituduh, Vice General Secretary, NU states “NU is proud to be announcing partnerships with Kinesis and ABX, which have made possible for physical gold to be used as an investment solution which operates within Sharia law. This creates a great opportunity for compliant investment options for the Islamic community in Indonesia.
The products design and corporate values align closely with our core principles, with their dedication to accessibility of Sharia-compliant physical gold contracts. It’s something we welcome within our member organisation and believe will provide a strong impact within the economy of Indonesia.”
These partnerships form a key component in the functions required for a successful and effective monetary system across various business units. Kinesis continues to further onboard distribution partners as per the long-term Kinesis vision.