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Why do traders buy smuggled gold?

  • Published at 09:59 pm April 2nd, 2018
Why do traders buy smuggled gold?
Traders tend to buy smuggled gold instead of importing it. Gold traders’ association-- Bangladesh Jewelers’ Samiti (BJS) -- gave a letter to Bangladesh Bank Governor Fazle Kabir seeking permission to buy seized gold which are deposited to the central bank. Sent in January, the letter also said the matter of Bangladesh Bank’s approval in gold import is discriminatory and the process is quite lengthy. After the illegal consignment of gold is seized it is deposited to Bangladesh Bank. About 90% of the supply of gold is being fulfilled through smuggling. The rest is met up from the consignment through baggage rules. Bangladesh has a demand for gold of 30-40 tons per year. However,  the traders’ association’s President Gangacharan Malakar said the demand is 7-8 ton and it is met up through import. “Some gold come through baggage rules. The rest of the demand is met up through old gold,” said Gangacharan. Due to a complicated import process the supply of gold is less than the demand, which is why traders have to hike the price frequently, he said. “We cannot import gold due to numerous complications. But the demand for gold is increasing in the market. As the demand is on the rise the price is increasing. “That is why we have given a letter to the governor of Bangladesh Bank.”
Also Read- What are the barriers in importing gold?
Gangacharan said if the central bank sold the gold deposited to them then it would benefit the industry. The government will also earn revenue. The letter said no individual or organization imports gold following due legal process. Since gold is a medium of deposit it has huge demand in the country and abroad. According to Foreign Exchange Regulation Act-1947, even after completing all formalities of letter of credit (LC) traders have to get approval from Bangladesh Bank, which is discriminatory and lengthy. “Gold can be imported by following due process as per Foreign Exchange Regulation Act-1947. If anybody applies for LC then Bangladesh Bank issues either objection certificate or no objection certificate considering public interest,” said Debasish Chakraborty, spokesperson and executive director at Bangladesh Bank. “This should not be said discriminatory or time consuming,” he said. The association in its letter also said Bangladesh Bank has a huge deposit of gold seized on various occasions. There has been no auction since July 23, 2008. If the central bank sells the gold to the traders at a fair price it will meet the local demand and the government will also earn a lot of money. The association urged the central bank to consider the issue and call for auction to sell the gold. The association’s General Secretary Dilip Kumar Agarwala said: “Thousands of tons of gold are deposited to Bangladesh Bank. But we are not getting gold. The import of gold is also complicated. That is why we want to buy the smuggled gold. “We gave letters to Bangladesh Bank several times. But it is not responding,” he said. A recent study by Transparency International, Bangladesh (TIB) said the government faces revenue loss of Tk487-974 crore every year in gold sector as it is imported illegally. According to Bangladesh Customs and Bangladesh Bank, as many as 2,000 kg gold have been seized from different airports in the last four years. Since independence, about 5,000kg or 125 maunds of gold have entered Bangladesh illegally. Of the amount, no owner was found for 60 maunds of gold. Besides, ownership of around 30 maunds is pending as the cases are not disposed. However, 15 kgs gold have been returned to the owners at the court’s directives following payment of duties. The rest have been sold in auctions. Sources said gold has been smuggled into Bangladesh since 1980s. In 1985, 96 kg gold was seized and 120kg gold was seized in 1986. Customs intelligence officials at different airports seized 12 kg gold in 2009, 9 kg in 2010, 4 kg in 2011, 24 kg in 2012 and about 26 maunds of gold between 2013 and 2015. As many as 124 kg gold was seized from a Nepal flight in July 2013, which was the biggest seizure. The second biggest haul was held on April 26, 2014. The customs, police or Airport Armed Police Battalion (APBn) deposited the seized gold to Bangladesh Bank. This article was first published on banglatribune.com