Singapore, Indonesia offer monetary adventures
December 20, 2018
I spent much of the previous two weeks in Singapore, with a day trip to Batam Centre, Indonesia. In contrast to the United States, just about anywhere in Singapore is less than 20 miles from Indonesia and Malaysia, nations whose populations (32+ million and 266+ million, respectively) are much more populous than the 5.8 million in Singapore.
Because of the close proximity and the significant financial interconnectedness, monetary arrangements in Singapore and Indonesia are different than they are in the United States.
In both countries, one of the most common businesses you encounter are currency exchanges. Some are stand-alone operations, but many stores also have a currency exchange counter. In one Singapore mall, of four side-by-side stores, three had currency exchange counters. I think about 1/3 of the exchange places had long boards posting their buy/sell prices – none of them charged any service charges beyond those prices.
With so many options available, I found the buy/sell spreads to be far more competitive than are available in America, a land where most currency exchange activities would tend to be near to national borders or major ports of entry.
For instance, the Singapore dollar is worth about 72-73 cents to the U.S. dollar. The inverse is that the U.S. dollar is worth about $1.37-1.39 Singapore dollars. The buyers were offering at least $1.30 to as much as $1.35 Singapore dollars per U.S .dollar. The U.S. dollar sell rates ranged from $1.375 to $1.40 Singapore dollars. One vendor was buying U.S. dollars at $1.35 and selling at $1.375 Singapore dollars, a spread of barely 1.8 percent. Even for exchanges between Singapore dollars and the Indonesia rupiah, the buy/sell spreads tended to be 3 percent or tighter for small quantities. One operation would pay $1.34 Singapore dollars for U.S. currency up to $20 denomination and $1.35 for U.S. $50s and $100s. There was virtually no paperwork other than a receipt for the transaction, no names or ID required.
Singapore gained independence in late 1965 and issued its first coins in 1967. All are still legal tender, although the diameters were reduced during 1985 and some metal compositions have changed. I brought with me all the spendable Singapore coins that my company had accumulated and only had one store where they would not accept the large older coins. One taxi driver even got excited to receive an old dollar coin as part of his tip.
One-cent coins were last issued for circulation in 2001. It is of such small value that merchants always rounded cash transactions to the nearest five cents. Circulating coins include the 5¢, 10¢, 20¢, 50¢, and $1 denominations. Currency denominations, which are all plastic now, start at $2, $5, $10, $50, and go up to $1,000. Because the notes are plastic, the condition of all that I saw was high.
Most goods and services were priced inclusive of the Goods and Services Tax. Exceptions included sit-down, non-fast food restaurants, where such establishments normally added a 10 percent service charge plus the GST. Most merchants that accepted credit cards did not add an extra fee. However, taxis and service businesses often did charge a fee to accept cards.
In walking around, I passed a few coin and stamp shops that seemed more to serve tourists than serious numismatists. One had some junk boxes on a table outside on the sidewalk, so I took a closer look. In the dollar bucket were about one-third arm’s length poor quality counterfeits of coins that otherwise might be $10-50 pieces. Every single piece in those buckets had been harshly cleaned. That discouraged me from wanting to investigate further. It there are coin shops for serious collectors, they are likely not to be found in tourist shopping areas.
If you wanted to purchase gold, your best bet would to be to go to a jeweler. One jeweler had a sign indicating that the .999 fine gold ingots and jewelry in a section were selling for $59 per gram (approximately $1,330 U.S. per troy ounce) or the .916 fine gold items at $54 per gram (again, about $1,330 U.S. per troy ounce of gold content). The displays had almost no coins. I believe that Singapore recently exempted gold coins from a 3 percent import tax. There were no signs indicating that the Goods and Services Tax would be added to the sales price. If not, then the jewelry could be purchased for less than 7 percent above the intrinsic gold value.
I did see some instances of banks operating a single-desk kiosk in malls. I would be fearful of security to the bank and its customers if this were done in many other countries, including America.
Taking the ferry over to Indonesia for a day trip turned out to be less than wonderful. First, the ferry was held for a half hour while an incoming cruise ship docked. Then, it took 90 minutes to go through Indonesian Immigration once arriving in Batam Centre. The planned trip was to put us on Indonesian soil for four hours. Half of that was gone before we even exited the arrival building.
Then we learned we had to go through immigration again an hour before departure, which barely left us time to go to the mall across the street to eat lunch. It might sound like paying 118,000 rupiah for lunch for two is a lot, but that was barely $8 U.S. Besides restaurants with multiple Asian cuisines, the mall also had an A&W, Burger King, KFC, and a Wendy’s.
My sister and I grabbed a few quick souvenirs on the way back to the ferry dock, but I spent less than one-third of the Indonesia currency that I had brought with me to leave in that country (meaning more business for the currency exchange in Singapore, where one of the 20,000-rupiah notes was too worn to be acceptable – all Indonesia currency is still printed on paper). The slow operation of Indonesia’s immigration resulted in less business for the country’s merchants.
While I did see multiple currency exchanges in Indonesia, I didn’t have time to investigate buy/sell rates. The circulating coins go up to 1,000 rupiah, while the currency goes from 5,000 through 100,000 rupiah.
Upon return to Singapore that day, in comparison, it only took about 10 minutes to pass through immigration.
Neither nation had money changers operating in the streets as I have utilized in a handful of other nations I’ve visited over the years.
Next year, I plan more international travel, including a trip to two new African countries for me. In my childhood, I lived in Sudan and then Liberia for several years while my father was in the foreign aid program. I also visited Egypt and Senegal. I can speak a little bit in about ten African languages and dialects, plus Arabic and French, and am starting to learn the dialect spoken in southwest Uganda. Look for another report after that trip.
Remember – correlation does not prove causality! However, it did happen that the gold and silver prices jumped at least 1 percent when I left the country and did not return to the lower levels until I got back. While I take no credit for that occurrence, if some dealers and collectors would like to raise funds to send me on an additional foreign vacation, I would be willing to sacrifice myself for the cause.