Gold Traders Mull Over Plans to Set up Gold Exchange

The gold industry and the government agreed, in principle, to establish a gold exchange under then-president U Thein Sein’s tenure.

Over the last year, the National League for Democracy-led government and industry associations have been seeking to set up an exchange market where gold and metal could be freely traded in one place. In the third week of July, the Myanmar Gold Entrepreneurs Association (MGEA) and gold traders from different regions and states held a meeting to outline plans for moving ahead.

The plan to set up a gold exchange, approved since 2015, included the formation of a trading system, a secure market where prices are fixed, a stable trading system and practices aligned to international standards. The standardisation of a single fixed price of gold is part of the objective.

The meeting held in Yangon on July 21 was wide-ranging, according to traders who spoke to The Myanmar Times. Discussions touched upon how the gold exchange should be set up: whether MGEA should lead the development, whether sub-national associations should collaborate to spearhead the project or whether the Myanmar Gold Development, a public company established in 2012, should carry out the plan.

“What they want to do is to set up the gold exchange with the MGEA heading it and the remaining groups in regions and states cooperating and supporting it.

“The MGEA alone or individual associations in regions and states cannot take sole charge of the formation of the gold exchange because those organisations are non-governmental organisations [NGOs], and they are not allowed to make any profit.

“If profit is to be made, measures must be implemented by Myanmar Gold Development, which was established in 2012. The public company should deal with this,” said U Tin Tun, chair of Mandalay Gold Entrepreneurs Association.

There are plans for the MGEA to organise a ceremony for the founding of the gold exchange in September this year.

“If the gold exchange is to be established, there must be fixed prices.

“Currently in Myanmar, no one is setting and standardising the gold price.

“I’ve heard that once the gold exchange is set up, foreign investments will be coming in. But, we have no plans to take part,” he added.

In addition, the gold exchange project will also require coordination and support from relevant ministries such as the Ministry of Home Affairs, the Ministry of Mines, the Ministry of Commerce, the Central Bank, and the Ministry of Finance and Revenue.

As the current trading system in the gold market does not align to international practice, this discrepancy poses a challenge for traders in the gold exchange market.

“We want to export abroad to other countries, and we want to buy our own shares.

“If gold-mining companies want to take part, then they should be able to do so. If that were to happen then the public company will implement the setting up of the gold exchange.

“For individual markets in states and regions, they will act according to their own plans and guidelines, in the same way as how associations in Yangon and Mandalay carry out their own plans,” U Tin Tun explained.

In May, the operators of gold exchange in Hong Kong, Shanghai and Singapore have offered the Myanmar government professional and technical support in order to establish a bourse in the country for trading the precious, according to the MGEA.

MGEA secretary U Kyaw Win said a gold exchange from Hong Kong and another from Shanghai, as well as Singapore Gold Bullion Market Association, have offered Myanmar advisory and technical support.

If an official gold exchange market is established, Myanmar can trade the metal freely with the international community.

Back in 2015, the MGEA first sent its proposal for an exchange market to be established to the commerce and finance ministries.

Industry figures making the argument for an exchange market have also pointed to countries such as China, where they say official exchanges for gold trading have reduced illegal trading and smuggling.

Myanmar Gold Development Public Company Limited, which was set up by the gold entrepreneurs association, will be in charge of setting up the exchange, according to U Kyaw Win earlier this year. But the relevant ministries and the Central Bank are all involved in the consultations.

The central exchange would also allow people in other countries to buy gold from Myanmar more easily, but the commerce ministry first needs to remove gold from the list of restricted exports, the MGEA secretary added.

U Khin Maung Lwin, an assistant secretary at the commerce ministry, told The Myanmar Times in August 2016 that gold would be removed, along with several other commodities.

U Kyaw Win at that time also noted that the removal was likely to occur once the ministry had finished its final draft of the gold trading rules and regulations.

 

Source: The Myanmar Times

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