Taken from Maybank's website:

Better Protection: Investments in Maybank Gold Investment Account are fully backed by physical gold deposited in Produits Artistiques Metaux Precieux (PAMP S.A)

Who says they are not backed? I don't invest in gold but I would trust Maybank more than this ETF. In fact, Maybank once allowed you to withdraw physical gold. However, they discontinued it (probably costly to entertain customers withdrawing and putting in physical gold) and now push their Kijang Emas as physical gold instead.

But then again this ETF is cheaper to trade even if it's all on paper.

It depends on the level of assurance you need I guess. Most people say you're not really buying gold unless you are buying physical gold that can be kept in safe deposit box.

There have been cases whereby the companies offering gold investment schemes go bankrupt even they claim to be gold backed etc. This is because there really is nothing to back the investment and it's just all on paper. There was no physical gold involved even they stated it. What investors did? They sued. But not like they can get their money back anyway since there really is nothing in the company.