A cumbersome import procedure and high taxes have led the Bangladeshi jewellery industry to rely heavily on smuggled gold.
Speaking to several jewellers in the city, this correspondent found that most of the ornaments availa-ble in their stores was in fact made from smuggled gold.
“About 70-80% jewellery in my shop is made of smuggled gold,” a shopkeeper at Bashundhara City told this correspondent, who was at the time posing as a buyer in order to glean information.
“There is no scope for importing gold in our country because of all the hurdles and time consuming procedures,” the owner remarked.
Several other jewellers also admitted that most of their gold had come in through smuggling.
High taxes encourage the gold smuggling, said another jeweller at Bashundhara City.
“If we import gold through proper channels, price of a one bhori gold ornament will be around Tk70-80,000. Due to the lack of a government policy, most of us depend on smuggled gold as it costs much less,” this owner said.
Yesterday in the local markets, ornaments of 22-carat gold were selling at Tk49,572 per bhori, 21-carat gold at Tk47,356 per bhori and 18-carat gold at Tk40,590, according to the Bangladesh Jewellers Sami-ty (BJS).
In the global market, an ounce of pure gold was selling at US$1,313. At this price, one bhori of gold in Bangladesh would cost Tk37,914, given the exchange rate of Tk77 per dollar.
The General Secretary of BJS, Dewan Aminul Islam Shahin, disagreed about the source of gold in the industry, saying the main source of gold in the jewellery industry was recycling and expatriates who brought in gold or ornaments.
“We procure gold from people coming to Bangladesh from abroad and it’s another source of supply,” said Dewan. “Expatriates supply over 10% of the total demands of the country’s gold
market.”
However, he agreed that the import policy was too difficult for jewellers.
“There is no provision in the import policy which allows us to import gold bars directly,” he said.
“We can only import gold through opening letters of credit (LC) and have to pay 58% tax, which is a lengthy and complex procedure,” he said. “This is great problem for the industry as it has pushed the price of ornaments up and beyond the reach of common people,” he added.
When asked about the bulk amounts of gold frequently seized at customs at the airports, he said the gold that is smuggled in is in fact smuggled out to India again.
“Indian smugglers use Bangladesh as a channel as the government of India recently increased the tax on gold import to 6.5%,” Dewan said.
In the last seven months, customs officers have seized over 300kg gold at Shahjalal International Air-port.
What’s the fix?
“There is no support from the government for the betterment of the jewellery industry,” said BJS Sec-retary Dewan.
“There is no direct import of liquid gold in our country; we can only import gold through LCs,” he said. “Sometimes we also buy gold from Bangladesh Bank when it goes on auction, but it is a rare case.”
“If the government introduces an exchange system to import gold through Bangladesh Bank’s nomi-nated organisation, it would bring the jewellery industry under a system,” said Dewan. “It is a world-wide practice,” he remarked.
Commenting on the existing import policy, which is over 65 years old, BJS President Delip Roy said, “Sure, it allows us to import gold, but it takes over 15 days. That makes it tough to adjust prices as the price of gold fluctuates every day.”
“We want a comprehensive gold import policy which will tell us how we should get gold and in which prices it should be sold,” he added.
The BJS leader said if the government were to introduce a separate policy for gold import to ensure constant supply, jewellers would be able to sell their ornaments at the global rate in the local market.
A jeweller at New Market told this correspondent the Bangladeshi jewellers made world-class orna-ments which could be exported.
“Our products are in demand abroad due to their lightness and attractive designs. Our goldsmiths can made ornaments very light compared to ornaments in India,” he said.
“We just want supply of gold, rather than some policy,” the jeweller added.
“Currently, the gold is imported under the general import policy. If the jewellers have any query related to gold import, they can communicate with concerned authority,” said Commerce Secretary Mahbub Ahmed.
In 2011, responding to the demands of BJS, the government decided to formulate a national gold poli-cy to facilitate expansion of jewellery business in the country.
It formed a committee to formulate gold import policy with representatives from the concerned minis-try and organisations. The initiative, however, is yet to bear any fruit.