Short supply of gold hits jewellery sector hard

Short supply of recycled or pure gold due to new tough provision of the passenger baggage rules for non-resident Bangladeshis (NRBs) for carrying gold has hit the country's jewellery sector hard.
Bangladesh Jewellers Samity (BJS) general secretary Dewan Aminul Islam said: "The only source of our locally recycled or pure gold supply in the country is the non-resident Bangladeshis as import of gold is officially banned."
The budget for 2014-15 on the other hand has raised duty to Tk 3,000 per tola (11.664 gram) for passengers for bringing an additional 200 gram of gold in the face of rising smuggling of the precious metal.
Under the baggage rules, passengers are allowed to bring in 100 grams of gold ornaments free of taxes.
But the previous passenger (non-tourists) baggage rules allowed a passenger to bring up to 200 grams (about 17 tola) of gold ornaments  duty-free. The passenger could bring in another 200 grams of gold bar or bullion on payment of Tk 150 duty for each tola (11.664 gram).
The BJS GS said: "The new provision is tough. The passengers are not bringing any gold now. Those, who are not aware of new passenger baggage rules, bring some paying high duty."
"In this situation, as we are dependent on non-resident Bangladeshis for gold supply, the tough conditions have led to a supply shortage. Earlier, they used to pay Tk 150 tax for each tola of gold. It is now Tk 3,000 per tola," he said.
Mr Islam also said: "We will have no other alternative but to increase prices of gold in the domestic market soon if shortage of recycled gold and rising trend in international market prices continue."
The current prices of per bhori 22-carat gold are Tk 48,406, 21-carat Tk 46,248, 18-carat Tk 39,658, and the traditional gold Tk 27,410, according to the BJS data. The prices were refixed on June 23 last following price hike in the international market.
The price of gold in the international market fluctuated from $1,300 to $1,310 per ounce on June 23. It rose from $1,318.45 to $1,322.80 per ounce on Friday.
The domestic price of gold is mainly determined by international market prices and flow of recycled gold into the country.   
BJS President Dilip Roy said: "The new baggage rules now discourage passengers from bringing gold ornaments or gold bars as it was in the past. That is why the jewellers are finding it difficult to keep their businesses running."
He urged the government to formulate a national gold policy so that the local jewellers could get pure gold from the central bank or import it legally.