Local jewellers are calling for the government to privatise their multibillion dollar a year industry and allow for individual traders to export rare commodities directly under a more favourable tariff scheme.
Jewellers said that a limitation on exports of raw and polished precious stones to sales at government-run emporiums and selected markets was strangling the sector.
“We go to the [government-run] exhibitions and only display our products there, but we want to secure bigger contracts for mass production and export,” said Daw Thet Thet Khaing, owner of local jeweller, Golden Palace and Forever Gems. “Our consumers are spreading all over the world, so it would be better to export our jewels to the place where they can easily buy our products.
“There is no direct export for any kinds of gemstones – raw or polished – allowed,” she said, adding that other ministries are adapting their export policies in order to promote local businesses.
Currently, jewelers are only able to sell their wares to Myanmar residents and to foreign citizens who attend government-sponsored emporiums, which are held no more than three times a year. Buyers at the emporiums are primarily interested in raw stones.
“They then do the value-added work in their own countries and sell on the stones for 10 to 100 times the purchase price,” said Daw Thet Thet Khaing said. “It really causes a lot of suffering for jewelers in our country.”
Daw Thet Thet Khaing, chairperson of Golden Sun Cooperative Ltd jewellers, said that because access to the marketplace is limited, gem dealers are yielding little profit.
“Just selling raw stones at the emporium is like we are taking a risk ourselves because of the little profit [on raw stones],” she said.
In 1995 the Myanmar Gemstone Law and bylaw were promulgated, providing for Myanmar nationals to excavate, produce and sell gemstones on the local and international market, but stricter regulations were soon put in place in an effort to curb rampant smuggling. Nevertheless, experts said that such rules did little to stop the problem, while further exacerbating illegal trade problems by limiting export channels so severely.
Estimates show that Myanmar produces up to 90 percent of the world’s rubies, with its best quality products, often described as “pigeon-blood” gems, fetching higher prices than diamonds at some international auctions.
Figures from the 2011-2012 fiscal year recorded 43,185 tonnes of jade and 13.398 million carats of precious stones were recorded through official export channels. Government representatives were unable to provide data to The Myanmar Times on the monetary value of these exports or how much was recouped in tax.
Currently, there is a 30 percent commercial tax on all gem exports payable to the government and 10pc retail tax at emporiums. While this figure is low compared to other precious natural commodities such as wood, which is taxed at 100pc, jewelers say the tax is prohibitive to establishing a lucrative export market.
Daw Mar Lar Myint, general manager of Zeyar Arrman, Gems, Jade Home Craft Production, said liberalising the export market could help defeat illegal trade of precious stones.
“We are in Sagaing Region, and it mostly seems that illegal gem trade is occurring on the China-Shweli border,” she said. “It the government allowed export, and kept tight restrictions at the borders, there will not be as much of an illegal gems trade.”
The largely unregulated border trade areas are riddled with merchants who smuggle raw jade and gems to countries such as China, Thailand and India, who refine then sell finished goods to international markets.
“Thailand is very famous for polished rubies and sapphires. China is famous for jade and India is very famous for diamonds. This success is related to their government policies,” said Daw Thet Thet Khaing of Golden Palace and Forever Gems. “Sanctions [on Myanmar] are lifted and the market is opening up, but we can’t open our door and go outside. Internal barriers are huger than external ones.”
She said barriers were not only legislative, but political. A lack of support to develop the sector with increased training and institutions supporting polishing and production in-country meant the sector was suffering.
“To get our products to a world class standard we need market access, technology, financing and technical assistance, as well as capacity building,” she said.
“To develop SMEs [small and medium-sized enterprises] we need to build institutions to fulfill the needs to develop our industry or we will leave.”
U Maung Maung San, owner of Maung Maung San Gems and Jewelry Co Ltd, said local players have repeatedly asked the government to revise the regulations, but to no avail.
“We have requested to change the policies made by the Ministry of Mining many times, but it’s still unchanged,” he said. “They just allowed exporting wares but not the stones. They said that preventing the export of precious jetwels to other countries helps stop illegal activity.”
U Win Htein, director general at the Department of Mines, said the government has been debating amendments to the 1995 Myanmar Gemstones Law and associated policies for over a year and welcomes feedback from jeweller associations, though he did not indicate if and the when rules would be revised.
“The law mentions that the country’s resources are not allowed to go outside the country and are restricted to production and consumption for Myanmar nationals,” U Win Htein said of the purpose of the export limitation.
As far back as 2006, President U Thein Sein, then-chairperson of the Leading Committee for Development of Myanmar Gems Industries, voiced his desire to see a developed finished gem industry in Myanmar.
U Tun Hla Aung, joint secretary general of the Myanmar Gems & Jewelry Entrepreneurs Association, said the 30pc commercial tax was prohibitive to the sector. At government-run emporiums and at the airport the tax for retail sales is only 10pc.
Source: Myanmar Times