The President of Bangladesh Jewellers Samity Ganga Charan Malakar is upbeat about the future of the domestic gold sector and expansion of the export market for gold jewellery. The basis of his optimism is the proposed gold import policy which was sent to the cabinet for approval on May 23.
Due to the absence of a proper gold import policy till date, the gold sector of Bangladesh has depended on informal supply chains. Annual domestic demand for gold is between 30 to 40 tonnes, according to some studies. For the last three decades, traders and jewellers have claimed that they rely on gold brought into the country under baggage rules and recycled gold. But the gold market actually depends on smuggled gold. A good number of gold traders and jewellers depend on as many as 30 gold smuggling rackets to receive their gold, said an intelligence agency report submitted to the Prime Minister's Office in 2015. According to Transparency International, Bangladesh (TIB), around 80 to 90 per cent of Bangladesh's gold demand is met from smuggled gold.
The authorities are aware of these. But they seem to turn a blind eye to the prevailing situation because of the soaring domestic demand for gold. It is one of the most precious and dear items widely used as gifts in weddings and other social events. Gold is also owned as tangible assets.
Thus the local gold market has grown despite the lack of accountability and monitoring from the government. At the moment, there is no record of the total number of gold traders, the demand for gold and amount traded daily or annually and so on in the country. As far as the gold jewellery market is concerned, there are reportedly 128,000 gold jewellers in the country, with 10,000 based in Dhaka.
However, according to the stakeholders, change is around the corner. Ganga Charan Malakar, echoing the finance minister, hopes the proposed gold import policy will establish transparency and accountability in gold trade. A better business environment will be created. Above everything else, when the market will be regulated, he believes, the social stigma associated with the trade as being heavily dependent on smuggling and smuggling-related activities will be removed.
The proposed gold import policy may be a boost to jewellery exports. Ganga Charan happily notes that the proposed policy makes a number of recommendations that are likely to help the gold jewellery manufacturers and exporters. Some of the proposed incentives for gold ornament exporters in the draft policy include tax benefits, cash subsidies as well as duty draw-back benefits for imported gold bars to be used for manufacturing and exporting of handcrafted gold ornaments
The policy also recommends establishment of laboratories for ensuring quality of gold, introduction of gold hallmarking (procedure of evaluating the gold to ensure that it adheres to international standards of purity) and cash memos with detailed description of ornaments for protecting the interest of consumers at home and abroad.
The global gold jewellery market was worth US $ 94.3 billion in 2016. Some of the biggest export destinations for gold jewellery are China, India, USA, Russia, countries in the Middle East, Europe and Southeast Asia. China and India dominate the export market, together claiming about 90 per cent of the global market share.
Bangladesh's jewellery exports account only for 0.7 per cent of the market. However, there is scope to expand gold jewellery exports. Ganga Charan points out some of the inherent advantages of Bangladesh jewellers. Most of them have been in the business for generations, and as such, are highly specialised in handcrafted jewellery manufacture. Such jewellery items enjoy higher international demand over other gold ornaments which are mostly machine-crafted.
If and when the proposed gold import policy is implemented, it will be turn of the gold traders and jewellers to make good use of it to flourish in the domestic market as well as establish greater presence in the global market.
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