Gold-rich Laos hits mother lode with S-E Asia's first bullion bank amid inflation, currency blues

Business Times

16 hours ago

[VIENTIANE] In the heart of a resource-rich continent famed for metals and gems, one of South-east Asia's smallest economies quietly launched the region's first dedicated gold bank – a bold bid to draw tonnes of the precious yellow metal back into the formal financial system.
With protracted double-digit inflation (though gradually easing), hefty debt levels, and renewed kip depreciation plaguing the landlocked nation, Laos is betting big on the safe-haven asset.
It is a well-timed gambit, seeing how gold prices hit multiple fresh highs through 2024 before peaking in April 2025 to breach US$3,500 per ounce. This year, the metal has gained some 28 per cent so far.
In an interview with The Business Times, Lao Bullion Bank chief executive Chanthone Sitthixay said: 'There are so many commercial banks in Laos and the limitation is that the local currency, the kip, cannot be transacted at the international level. But gold can.'
And so he pitched the creation of a local gold ecosystem in 2020 to former Lao prime minister and current President Thongloun Sisoulith, before the bank's eventual launch in December 2024.
Dr Chanthone Sitthixay, the CEO of Lao Bullion Bank, pitched the idea of creating a local gold ecosystem to the government back in 2020. PHOTO: LAO BULLION BANK
Research suggests that the country still holds more than 1,000 tonnes of gold underground – worth an estimated US$100 billion, said Dr Chanthone.
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Meanwhile, private households currently hold some US$10 billion worth of the precious metal, he added, noting that responsibility falls on the Lao Bullion Bank to coax the wealth back into the formal financial system.
Six-month track record
As at the first half of 2025, Lao Bullion Bank amassed between 500 kg and 600 kg of gold from private households.
Once its refinery – which has a capacity of up to 150 tonnes a year – is completed in end-June, the bank anticipates onboarding gold miners as a new customer segment, noted the CEO.
Dr Chanthone expects mining contributions to then make up some 30 per cent of the bank's assets – with households still accounting for the bulk.
The target, however, is to scale up refinery services so that gold from miners eventually accounts for 70 per cent of the bank's assets, added the 49-year-old business tycoon.
To achieve this, Lao Bullion Bank is eyeing a timeline of around one year, following a government directive requiring all miners to refine their gold to a purity of more than 99 per cent before it can be exported, he said.
Miners in the country traditionally exported only the raw metal to foreign markets because of the absence of a comprehensive gold ecosystem that encompasses mining, refining, trading and investment.
In the six months since its opening, the bank has opened more than 2,000 accounts and is seeing an increase of about 10 new ones each day.
'We haven't really been bombarding people with promotional campaigns and such,' explained Dr Chanthone. 'We are trying to make sure that the systems and infrastructure are in place.'
On customer demographics, the CEO shared that the bank serves both locals and foreigners, including expatriates who work in the country.
Interestingly, the bank has observed a higher number of younger clients, driven by growing interest in investing, but whose deposit volumes remain modest. Conversely, it has fewer clients who are older, but they contribute more, he said.
Blueprint for growth
Within the next three years, the bullion bank intends to expand into four other major Lao provinces: Luang Prabang, Oudomxay, Savannakhet and Champasak, said Dr Chanthone.
It currently operates out of a five-storey building in the capital, Vientiane.
Bank counters and tellers occupy the ground floor, while the second floor houses a laboratory for testing modest amounts of gold. The third floor holds the information technology and trading rooms, while the upper levels are reserved for office and meeting spaces.
Like a traditional commercial bank, it offers deposit, withdrawal and transfer services.
What is unique, however, is that the Lao Bullion Bank issues certificates to clients who deposit their gold, and these documents can be used as collateral by customers seeking loans from commercial banks and financial institutions in Laos, said Dr Chanthone.
He explained: 'We have 37 banks in Laos and the total deposit amount at these commercial banks is 110 per cent of our gross domestic product (GDP). For gold, we estimate it to be about 100 per cent of GDP.'
These deposits combined will make up more than 200 per cent of Laos' GDP, which would demonstrate the country's strong liquidity, he said.
'If customers only deposit gold with the bank, it will not be liquid,' continued Dr Chanthone. 'But once the certificate is issued, they can get financing from other banks, which creates liquidity.'
Another novel offering of the bank is its automated vending machines that operate just like conventional ATMs, except that these dispense gold.
The machines now offer four types of gold bars – weighing 1 g, 7.5 g, 15 g or 30 g – that come in either a standard design or limited designs of national landmarks That Luang and Patuxay.
Two of the 10 machines the bank has are currently placed within the building, while the remaining eight will be installed in hotels, markets and other public places once safe, populated locations have been identified, said the CEO.
Two of Lao Bullion Bank's 10 gold vending machines are housed on the ground floor of its building. PHOTO: LAO BULLION BANK
Dr Chanthone noted that the primary target audience for these gold vending machines are tourists.
He hopes that tourists will come to associate Laos with its gold – the same way Myanmar is known for its jade, Thailand for its rubies, and Sri Lanka for its sapphires.
A screen capture of the Lao Bullion Bank's website on Jun 26. The bank sells four different types of gold bars – weighing 1 g, 7.5 g, 15 g or 30 g – that come in either a standard design or limited designs of national landmarks That Luang and Patuxay. SCREENSHOT: LAO BULLION BANK WEBSITE
Other initiatives in the pipeline include gold-trading services on international platforms, with the bank's trade team poised to officially begin operating in August.
Golden ticket to fiscal stability
Set up as a public-private partnership, Lao Bullion Bank is 25 per cent owned by the government, with the remaining 75 per cent share belonging to primarily family-owned investment holding company PTL Holding.
The initial capital of US$60 million injected into the bank was accumulated from the various family businesses, said Dr Chanthone, who holds a master's degree and PhD in strategic business management.
On whether the move was part of a wider de-dollarisation narrative exacerbated by the US' tariff volatility, the CEO demurred. 'The main objective is to focus on strengthening the local currency by (transitioning it) from non-convertible to convertible; and the country has gold, which can be considered near-cash.'
As the third-largest gold producer among Asean member states, Laos aims to become an Asian trading hub for the yellow metal by 2030.
The way Lao Bullion Bank supports the nation's goals, said Dr Chanthone, is 'by bringing gold that's out of the system back into the system, making it more liquid… and reducing the supply of M2 in the economy'. M2 is a broad measure of money supply, used by economists as an indicator of potential inflation.
Global appetite for gold continues to hold firm, with demand hitting its highest first-quarter level since 2016, according to an Apr 30 report by the World Gold Council on Q1 2025 gold demand trends.
Quoting the council's head of Asia-Pacific (ex-China) and global head of central banks Fan Shaokai, the release wrote: 'With the full impact of tariff measures still unfolding, investors continue to turn to gold, recognising its role as a portfolio diversifier that has historically performed well during periods of uncertainty.'
Neighbouring Indonesia also opened its first two state-owned bullion banks on Feb 26, some two months after the Lao Bullion Bank's launch.
Asked whether there exist opportunities for collaboration with South-east Asia's largest gold producer, Dr Chanthone concurred, noting that the bank has 'really good connections' with the Indonesian government.
The bank is a foreign associate member of the Singapore Bullion Market Association.
On his hopes for the bank and the country, the magnate concluded: 'The problems of Lao people must be solved by a Lao. I don't just do business; I want to do something that is impactful for the country.'
He added: 'We do our best to make the country prosperous.'