Home ›› 21 Dec 2022 ›› Editorial
Bangladesh is one of the countries in South and Southeast Asia which is traditionally known as producer of finest quality gold ornaments and jewelleries. The artisans of this industry have a long reputation as producers of the finest quality gold ornaments and jewellery. Though it is one of the oldest industries in the country. It has not developed to its desired potential because of certain limitations which involved the non-availability of gold to the business, financial support and a local market. As a result, the industry has not developed in the area of technology, production process, designing and innovation of jewelry products.
The major constrains faced by the jewelley industry in Bangladesh is the supply of gold which is banned from import until government formulate policy and issue The Gold Policy 2018 to allow import of gold under certain strict regulation. Until propagation of the policy, the industry was depending upon supply of gold from passengers of middle east under baggage rule and smuggling by professional smugglers since the independence. Bangladesh since its inception in 1971 has not imported any gold until recent time. Before independence, the State Bank of Pakistan established a quota for import of gold but that had been cancelled but industry was running since independence. On the other hand, gold smuggling in Bangladesh is at a record high with the country emerging as a major route into neighboring India.
While looking back to the history, in 1986, a study was undertaken at the initiative of Micro Industries Development Assistance Society (MIDAS) as a part of its scheme to help promote the growth of small industries sector in Bangladesh to determine the present status and the feasibility of exporting 'Gold Jewellery'. They have observed that the growth and development of gold jewellery have not much prospect in the local markets. However, opening of export channels in this sector may help the industry to grow as a result of caving a broader profitable market. The export trade in gold jewelleries will not only help to earn of valuable foreign exchange for the country but also would provide the security of jobs for the already employed 2-3 lakhs of artisans in this sector.
In April, 1981 a team comprising the officials of the Export Promotion Bureau and representatives of the local gold jewellery trade visited Dubai and Abu Dhabi in connection with Export Fair held there. It was felt by the team during their visit that there exists a demand for the kind of jewelleries that Bangladesh exhibited in the fair in the country concerned and that there exists a potential for exporting gold jewelleries in that market.
In 1985 Bangladesh Bank for the first time formulated a scheme outlining the guidelines and procedures for exporting gold jewelleries from Bangladesh titled as "Jewellery Export Scheme". The Export Policy for 1984-85 identified jewellery as one of the new export products for development. Unfortunately, those efforts could not develop the sector until the Gold Policy 2018 has been issued by the government. Bangladesh government issue the Gold Policy 2018 for import of finished gold in the form of gold bars and finished jewellery but not import of gold ore. Subsequently in 2021 amended the policy and allow import of unrefined and partially refined gold and gold ore.
The commerce ministry issued the Standard Operating Procedure (SOP), dated July 7, 2021, through a gazette notification in a bid to implement the Gold Policy (amended)-2021 for the establishment and running of gold refineries. As per the policy, the government have allowed unrefined or partially refined gold. These provisions have been incorporated in SOP for setting up and operating gold refineries. Entrepreneurs will have to refine those at their own refinery plants to produce and market different grades of gold bars and gold coins.
By this time, the ministry has given the initial nod for Bashundhara Group to establish a refinery. Bashundhara plans to establish the refinery in the city's Kuril area. Around 8,000 people will be employed through the venture and at least Tk 3,500 crore in investment was required to set up the refinery.
In the SOP, investors having authorized capital worth at least Tk 10 billion and paid-up capital worth Tk 1.0 billion will be eligible to build gold refineries in Bangladesh. They must set up the refineries on minimum 20 bighas of their constant and own land.
According to the SOP, investors will have to complete the work on their gold refineries within two years of awarding licenses. Source of raw gold has also been determined in the SOP based on the stock of some 100 tons of gold in one or more goldmines or having the capacity to supply 10 tons of partially refined gold in a year. The goldmines have to be recognised as the highest-grade goldmines for importing unrefined gold.
The entrepreneurs will have to sign memorandums of understanding with one or more international standard companies to import gold. Source of raw gold importers must not have any involvement in money laundering or not have any sanction by international community.
As per SOP, the National Board of Revenue (NBR) will offer bonded warehouse facility and tax holiday facility after commencing production for a certain period, considering the investment costly and risk-factor in financing, duty-free facility on import of capital machinery and other consumable products to be used in refineries. Entrepreneurs will have to submit reports on import, sale, stock or purchase of gold to the divisional officer of the Value Added Tax (VAT) office.
Investors will have to submit applications to the commerce ministry for setting up gold refineries along with details of probable capacity and necessary documents. There will be two committees--one for selecting investors and another for scrutinizing compliance.
In 2019, the world market for gold jewellery was equivalent to US$229.3 billion and it is expected to reach US$291.7 billion in 2025. The dream of Bangladesh will come true with ‘Made in Bangladesh’ gold bars and ornaments will be introduced globally as the country’s jewellery industry is set to achieve competitive export capacity with the ambitious project of Bashundhara.
With the ambitious investment, Bangladesh is advancing towards taking up the trade of refining gold in a bid to cater to the nearly $230 bn worth global gold jewellery market, which as research estimated the jewellery industry to reach $480.5 billion by 2025. It is planning to meet local demand of finish gold for local consumption and to export of finish gold and jewellery.
The writer is Non-Government Adviser, Bangladesh Competition Commission. He can be contacted at [email protected]
