In a move designed to enhance Hong Kong's role as a financial and logistics centre and meet growing regional demand for gold, Airport Authority Hong Kong announced on January 17 that it will open a precious metals depository at Hong Kong International Airport (HKIA) by the end of 2007. Airport Authority Hong Kong will proceed to establish the new facility upon Legislative Council's approval of a proposed waiver of trade declaration charges for gold.

The precious metals depository will provide a central, secure storage facility for traders, institutional investors, gold producers and refineries, and serve as a physical settlement platform for trades made on the Chinese Gold and Silver Exchange Society and other Asian markets. The depository will also minimise risk, and reduce settlement time, transportation and insurance costs for the industry.

Commenting on the new facility, Airport Authority Hong Kong Chairman Dr Victor Fung said, "HKIA is a hub for global flows of people, capital, goods and information. The depository complements this role and will allow Hong Kong to act as a bridge between global gold producers and markets on the Chinese Mainland. The new facility will also stimulate capital flows and provide a platform for the creation of innovative, gold-based investment products and services." Dr Fung added that the Hong Kong Government's plan to waive declaration charges is the key to establishing the territory as a leading centre of precious metals trading.

The depository will initially be a wholly owned subsidiary of the Airport Authority Hong Kong, with the long-term objective of divesting to major users of the depository. To ensure that the depository's services and physical infrastructure meet industry needs, the Airport Authority Hong Kong has established an advisory committee, which will be chaired by Airport Authority Hong Kong Finance Director Raymond Lai.

The following organisations have agreed to join the advisory committee of the precious metals depository:

Bank of China
Brink's Hong Kong Limited
Chinese Gold and Silver Exchange Society
Heraeus Limited
HSBC
Johnson Matthey Hong Kong Limited
Mitsui Bussan Precious Metals (HK) Limited
Scotia Mocatta - The Bank of Nova Scotia
Standard Bank Asia Limited
The Asia-Pacific Institute of Business of The Chinese University of Hong Kong
Wing Fung Precious Metals Limited
Wing Hang Bank Limited
Wong Sha Company Limited

"Tapping the expertise and experience of a wide spectrum of local and international organisations, we are confident that the depository will strengthen Hong Kong's status as a leading financial and logistics centre," Mr Lai said.

Revenues will be generated through rentals of secure storage space in the depository, which will have a total area of up to 300 square metres. A tender for the design and construction of the facility will be announced shortly.

HKIA is well suited to the establishment of a precious metals depository. The airport has state-of-the-art security, handles a wide range of high-value cargo and serves 150 destinations worldwide, including 40 Mainland cities. HKIA's proximity to the Mainland, where demand for gold is expanding rapidly, is also a plus.