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Likely contributors to Indonesia transaction volume

I thought it would be useful to pull together some of the data points on this.

Working population is ~135m. Better to use this rather than total population for any estimates.

~40% of this number in formal employment, so let's say ~54m for the purposes of higher % health insurance contributions etc. (https://www.statista.com/statistics/1336051/indonesia-share-of-informal-employment/)

For average monthly income, I've assumed a figure of $192 sourced from https://www.ceicdata.com/en/indicator/indonesia/monthly-earnings.

At this stage, I've tried to pull together some specific numbers that have been mentioned rather than applying general % adoption rates.
Given that we are so close, my inclination is then to just see how things develop.
 
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Click to expand...
CBV (remittances) from Malaysia to Indonesia
$1bn/month suggested by Eric (LFTV - 19th Feb 2020).
Fee would be (buy+transfer+sell) 0.9% (EDIT: it's actually 0.89%). If the whole market was captured, total fee value $9m pcm

This is in the future basket, but should be a solid contributor once set up.
Based on Eric's comments (LFTV - 21st May 2020), KAU will be much more cost effective than alternatives, so the likely adoption rate should be high for this feature.

3-5m migrant workers.
 
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Government employee pension fund

4.6m public sector employees
www.statista.com

Public Sector - Indonesia | Statista Market Forecast

The estimated number of employees in public administration in Indonesia amounts 4.62m in 2020. The central government debt in Indonesia is estimated to amount 41.8% of the country's domestic product in 2026.
www.statista.com www.statista.com

Government employee pension fund allocating a percentage of current fund holdings in KAU, and going forward, a percentage of government employee’s monthly contributions to be converted to KAU.
(Quarterly update)

I've found some numbers below related to Public Pension funds, but difficult to tie these to the above statement.

Maybe $2-4bn of pension fund assets is related to government employees.

Assuming government employees contribute at the higher rate, 4.6m * $192 * 5.7% ~ $50m contributions pcm.

So, whatever % is allocated to KAU would be applied to the above numbers. 0.22% of that would go to the fee pool.

Public Pension funds Source of data
I found it difficult to find figures (maybe because official docs would be in Bahasa). In the end, settled on this source:
For salaried employees, the total contribution rates are 5.7% for the JHT plan and 3% for the JP plan. According to official government data, at the end of 2020, around 49 million participants were covered under the JHT plan. Still, only 18 million were under the JP plan. The associated social security fund (DJS) managed a total of 475’000 billion IDR in assets (US$33 billion) or, on average, around 7 million per plan participant (US$500).

horasis.org

Indonesia - an untapped pension opportunity? - Horasis

The Indonesian pension system – a short overview The largest economy in Southeast Asia, Indonesia, has charted impressive economic growth since overcoming the Asian financial crisis of the late 90s. As a result, the country’s real purchasing power parity (“PPP”) GDP per capita has almost...
horasis.org horasis.org
Contribution rates square up with an OECD doc. The 49m number of participants square up approximately with those in formal employment, although 49m+18m could also match this.
 
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National health insurance contributions will be accepted in KAU
(source - Eric - LFTV - 21st May 2020)

220m Indonesians are covered by JKN.

For those in formal employment, contributions are 5% of salary (1% employee, 4% employer).
I'm going to assume that others just contribute 1%.

Let's say that the average total contribution rate is therefore 2.5% for all employed.
Total monthly contributions from all employed 135m * $192 * 2.5% = $648m

If everyone paid in KAU (seems unlikely) and it was all spent by JKN (buy+transfer+sell) 0.9%, fee value could be as high as $5.8m per month.
More likely to be a fraction of this.

This could be a slow burn.
However, the government will receive Holder yield on KAU funds received and not yet spent and potentially referrer yield, so they will be incentivised to promote this.
(source - Eric - LFTV - 21st May 2020)

It will in any case be convenient for those who have an income in KAU or for those who have to travel to make their monthly payment.
 
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Gold to Mecca (Hajj) savings
There are schemes with multiple travel agents to make this easy.

Typically $2bn/year savings and spend. long savings period (5-7+ years) lends itself to saving in gold making more sense than IDR.
1m travellers pa, $2k trip cost.
(Eric - LFTV - 21st May 2020)

Travel agents get Referrer yield so are incentivised to market this.
Saver gets Holder yield.

Fee (probably buy+transfer+sell) 0.9% although this might be more like 0.22% in the early years as people just buy to save. Once you have savers plus spenders, then the average fee % would rise.
Maximum Fee value if the full value was in KAU and with spends occurring - $18m pa.


Potential initial boost from part of existing funds of $7bn moving to KAU.
(Eric - LFTV - 19th Feb 2020)

There should be a strong incentive to participate.
Potentially a rolling ~5-7m participants.
 
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#GoldForNation
VP and President of country want to make gold a national asset.
1g/person/year savings target.
(Eric - LFTV - 19th Feb 2020)

Might take a little while to get going, but this is going to be promoted by the government.
They will also benefit via an additional premium to build the country's gold reserves, so have every incentive to do this.

If this reached as far as 100m of the working population and you had ~$6b pa (+100 tonnes mcap pa).
Fee (buy) 0.22% ~$13m pa.

This action won't necessarily generate that much itself in fees, but could really expand the number of accounts.
 
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What do these specific initiatives add up to?

I'm not going to try to put a figure on this.
It will depend on the takeup for each initiative.
  • The Pensions allocation will likely just happen - it's a central decision.
  • When introduced, CBV looks likely to get strong takeup.
  • Looking at the Gold/IDR chart, you would also think that there'd be strong takeup for the Gold to Mecca program. The incentive is likely to be strongest for those starting out on their savings plan, so overall, there's likely to be a gradual phase in.
  • National health insurance payments on the other hand may have relatively low adoption, unless this is incentivised.
  • GoldForNation could also be something that starts slowly.


Looking more broadbrush, who are the partners in Indonesia and what sort of integrations have been built into the apps?

There are now 9 publicly announced partners who will each use what seems to be a clone of the same app, although we've also had reference to desktop apps for JFX (perhaps also for ICDX).
  • JFX
  • MetalGO
  • Pospay Gold
  • Nunomics
  • IPHI
  • ICDX
  • Muhammadiyah
  • Artha Graha Bank
  • PT Pegadaian

The member firms of JFX and their millions of clients will be able to trade spot physical gold in international pricing and liquidity pools via the KMS/KAU.

Dompet Phuafa will actively promote MetalGO & the Kinesis Monetary System to their 1,000,000+ active members and introduce a referral network, with customised auto-referral codes set up for the organisation.

The PosPay App has over 1 million accounts, with PosGOLD automatically being available to that large user base.

100 million members Nahdlatul Ulama (NU) Islamic social organisation

Due to the shariah-compliance of Kinesis gold (KAU), the IPHI selected Kinesis’ native asset to introduce gold savings to their 10-million strong membership, comprised of Indonesian citizens of the Islamic faith who have taken part in the Hajj pilgrimage.

ICDX (Indonesia Commodities and Derivatives Exchange) presumably similar functionality as JFX.

We know that there is integration to 5-6 banks within the apps (video clips of this exist for MetalGO) and integration to retail payment apps:
integrations with multiple large Indonesian e-wallet and payment companies, such as OVO (owned by Grab), Gopay (owned by GoJek), E2Pay and Linkja. At least one or more of these e-wallet payment services are accepted by 80+% of all brick and mortar and online merchants across all of Indonesia.

(Italicised text sourced from Kinesis Quarterly updates and announcements)

From Vaultside Ep 1:
Muhammadiyah ... second largest religious organization behind NU ... have 50 million members.
They have 128 universities that they support across Indonesia. They have a large chain of hospitals that they run. So rather than NU, which is really just a member organization, it's more of a social thing.
Muhammadiyah is a really charity driven and educational driven. So there's a lot more touch points rather than just their membership. There'll be access points to these universities for us. There'll be access points to the hospitals for potentials for payments.

From Q2/Q3 2024 Quarterly update:

ctharvey said:
Artha Graha Bank has launched its own app for digital physical gold (KAU), AGIGOLD which is based on the same mobile application as PosPay Gold, JFX Gold X, Metal, Go, Nunomics, etc.

PT Pegadaian, the government-owned gold pawning and trading company has signed an agreement with Kinesis Monetary Indonesia (KMI) and our local partner Bullion Ecosystem International (BEI) to provide access for trading and storage of KAU and underlying physical gold. Pegadaian averages 2.5mt of gold trade per year.
Click to expand...

What are the possibilities in addition to the specifics outlined earlier?

We'll have to see how adoption of the different apps takes off, but PosGold will be seen by the 1+ million existing users of the PosPay app.
POS will be a trusted and familiar organisation where a lot of people do their financial transactions.

It will be fascinating to see how NUGold percolates through the layered social depth of the NU organisation.

There seem to be a wealth of on and off ramps available to anyone who decides to try/use the apps.


Once account holders have built sufficient savings, it will be interesting to see whether a native payments system emerges ie payment to business in KAU, business pays employees in KAU, employees spend KAU.

For the moment, I'm assuming that the payment app integrations will involve KAU to IDR conversions.

NB NUGold is now known as NUNOMICS.
 
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This is great stuff and these figures match numbers I've found. Current funds being transferred over the next year or so will produce large, steady increases.

Indonesia produced about 70MT in 2022, but now, like Russia, may choose to increase it. The bars I saw pictured with the director of the bank in SGP had all come from Indonesia over decades. You can guess the owner, but now the whole country can benefit from its own resources.

Imagine you run another country and see a working system that can be deployed quickly and integrated with Indonesia (to produce a multiplier effect) in a region moving to gold for trade anyway and sharia-compliant if needed. Even if you don't produce much gold, you can add your reserves to the system.

So...why wouldn't you do this? We're at the beginning, but the more this ball keeps rolling, the bigger and more unstoppable it gets.

Sovereign countries follow their own laws and will increasingly see sanctions as irrelevant, as the countries trying to impose those sanctions continue to collapse. The location of physical gold and silver have always matched the centres of power. It's the same now, but Kinesis' technology means that a country and its citizens can maintain vaults in multiple countries, but use the gold anywhere.

I'll drink to that and post the odd picture. The penny's just dropping with some people about the reasons for doing so.
 
Uchiki said:
From Vaultside Ep 1:
Muhammadiyah ... second largest religious organization behind NU ... have 50 million members.
They have 128 universities that they support across Indonesia. They have a large chain of hospitals that they run. So rather than NU, which is really just a member organization, it's more of a social thing.
Muhammadiyah is a really charity driven and educational driven. So there's a lot more touch points rather than just their membership. There'll be access points to these universities for us. There'll be access points to the hospitals for potentials for payments.
Click to expand...

Added Muhammadiyah as the 7th Indonesian partnership.
 
desir said:
It's only with the postal employees. Let's see how that goes.
Click to expand...
For now yes, but that is a lot of people!

[Indonesia] "grand opening that's scheduled for the second half of July.
... over the summer, they expect that they'll have over 10,000 active accounts. And by the end of the year, the goal is to have 50,000 accounts."

That's just the postal employees. Then it will roll out to the wider public. NUGold will also follow shortly after PosGold launch.
 
Troglodytes said:
For now yes, but that is a lot of people!

[Indonesia] "grand opening that's scheduled for the second half of July.
... over the summer, they expect that they'll have over 10,000 active accounts. And by the end of the year, the goal is to have 50,000 accounts."

That's just the postal employees. Then it will roll out to the wider public. NUGold will also follow shortly after PosGold launch.
Click to expand...
Thoughts on monthly transaction volume, in oz, per employee?
 
desir said:
Thoughts on monthly transaction volume, in oz, per employee?
Click to expand...
No idea, but I suspect relatively low for now, because it's a low income country. On the other hand, there is very good integration with the major banks and real utility for the use of KAU as a genuine currency (because it can be used for payments outright in some cases, and this will increase in the future). So it might surprise us to the upside. But at first I expect low numbers.

Another important factor could be the economic situation. Should at some point the rupiah weaken, then KAU could suddenly become very popular and then all infrastructure is in place to let it explode. People can simply download the app and have access to it immediately, and POS employees will all have knowledge of the system and can (and will, because of incentives) promote it.

The POS employees are important in this first stage because they need to be familiar with the system so they can explain it to their clients. With many unbanked using the post office to pay their bills etc or receive money from overseas family members, the POS employees are the guys and girls that people deal with face to face, so they can be very effective recruiters for the system. So I think this is a very good approach.

I think for the religious organisations something similar applies. They can/ will promote it top down, because there are great incentives for them to do so and they are respected by their members.
 
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