A gold policy, intended to fill up the void in relation to the import of the precious metal and check its smuggling, is now in place. The cabinet in its regular weekly meeting last week approved the policy, fulfilling a longstanding demand of the people engaged in gold trade. As the taste of the pudding lies in its eating, the effectiveness or weaknesses of the policy would only be known when it comes into force. However, the Bangladesh Jewellers' Association has welcomed the long-awaited policy soon after its approval with a strong note of optimism that smuggling of gold into the country would largely be curbed because of the policy.
Gold trade has never been like other business activities in the country. Though manufacture of gold ornaments is fully dependent on a basic raw material that cannot be sourced locally, the traders concerned have not imported even a gram of gold for decades. Yet the trade, almost fully dependent on smuggled gold, has flourished over the years. The people involved in gold ornaments manufacturing do not face that much of trouble in procuring the yellow metal since Bangladesh is an oft-used route for its smuggling into neighbouring India, world's largest consumer of gold.
The seizure of more than 1600 kilogrammes of gold brought into the country illegally during last seven years does indicate to the extent of its smuggling. The seized gold is thought to be a small fraction of the actual volume of the metal smuggled into the country. Meanwhile, relevant government agencies have, deliberately or otherwise, overlooked the impact of dependence of the country's jewellers on smuggled gold. Hopefully, the maiden gold policy, though belated, would serve the purposes of all the relevant parties, including the state.
The central bank would play a very important role in the implementation of the gold policy as far as selection of importers and dealers of gold and fixation of gold prices are concerned. Under the policy, jewellers would also have to procure licences from the relevant offices of VAT and district administration. Besides, the jewellers will have to submit a statement to an appropriate authority at the start of every month on the utilisation of gold.
One of the basic purposes of formulating the gold policy has been to encourage export of gold ornaments. In fact, it remains a mystery as to why the successive governments have ignored the potential of gold ornament export despite the availability of very skilled goldsmiths across the country. A number of countries, including neighbouring India, have been earning handsome amounts every year from gold ornament exports.
Rationalisation of duty on gold will be the first step towards helping the local jewellers to enter the global gold market. And the government is expected to do that in line with the objectives of the just-announced gold policy. However, fixation of duty would be an important issue since the demand for gold is very high in India. Obviously, none would want smuggling of gold, imported by local traders at reduced duty, to any other country. So, in the event of any notable reduction of duty to make Bangladeshi gold ornaments competitive in the global market, the government would have to introduce a very strong mechanism to check possible abuse of the facility. How that can be done is a matter that needs to be devised by the National Board of Revenue (NBR), the Bangladesh Bank and other relevant agencies.