Malaysia jolts bullion trade with 10% import duty on gold bars

[KUALA LUMPUR] Malaysia has imposed a 10 per cent import duty on some gold bar shipments, according to traders familiar with the matter, disrupting the bullion trade in the South-east Asian nation.

Some inbound cargoes have been charged a 10 per cent duty since at least early May, traders and dealers said, asking not to be identified as they are not authorised to speak to the media. 

As a result, some shipments were held at customs or have been diverted elsewhere as the extra cost – without a comparable rise in local gold prices – would make the imports unprofitable, some of the people said.

Bank Muamalat Malaysia, a local Islamic bank that offers gold-investment products, said that whenever a 10 per cent import tax on bullion is charged, the cost shall be transferred to customers, according to a statement this week. 

A spokesperson from the Royal Malaysian Customs Department said that the Ministry of Finance will be “engaging with the industry” regarding the imports of “minted gold products.” The Malaysia Gold Association and the local representatives of the World Gold Council declined to comment.

Gold rallied to a record earlier this year, stoking investor interest in the commodity, including in Asia. In Malaysia, some local banks have introduced gold investment products over the past year, and Loomis AB, a bullion logistics company, opened a vault near the country’s capital to cater to the growing demand.

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Malaysia imported around US$2.5 billion of non-monetary gold through April this year, according to data from the country’s Department of Statistics. BLOOMBERG