Diamond World becomes first Bangladeshi company to import gold bars

Diamond World has made history as the leading jewellery house has become the first company from Bangladesh to import gold bars through a legal channel to cater for both local and foreign markets.

The company brought in 10.5 kilograms of gold on June 30, which is an extraordinary case for Bangladesh as gold has never been imported through legal channels since the independence of the country.

"We are hopeful that we will be able to export jewellery within six months," said Dilip Kumar Agarwala, managing director of Diamond World Ltd.

Formal import will benefit customers as prices of the precious metal will come down to the levels of the international market. "Customers were bound to pay Tk 4,000 more than the international market prices. Now they will not have to pay any extra amount." 

Diamond World launched formal sales of the gold through a programme where Sheikh Fazle Fahim, president of the Federation of Bangladesh Chambers of Commerce and Industry, was the chief guest.

Diamond World's import followed the declaration of gold import policy formulated by the government in 2018 to clean the gold trade, make import and export easier, stop smuggling and ensure transparency in the trade.

The policy came in the face of demand from jewellers after the Customs Intelligence and Investigation Directorate seized huge cache of gold from Apan Jewellers for failure to show valid documents.

Following the formulation of the policy, the National Board of Revenue (NBR) allowed traders and jewellers to declare their stock of bullion and other precious metal in fiscal year 2018-19.

Agarwala said the NBR earned Tk 217 crore as 14,267 gold traders declared their stocks.

Smuggled gold meets around 80 per cent of Bangladesh's annual demand for gold, which hovers between 20 and 40 tonnes.

In a least developed country like Bangladesh, it is a common phenomenon for big hauls of smuggled gold making headlines. The amount of seized gold portrays the true picture.

In 44 years since 1971, around 2.2 tonnes of gold worth of over Tk 750 crore brought in illegally made its way to the country's foreign currency reserves.

A comparison would clearly depict how poorly Bangladesh has been performing in gold export when its neighbour India has been supplying 80 per cent of the handcrafted gold ornaments that the world needs a year.

In 2016, India exported gold ornaments worth $42 billion while the official figure for Bangladesh stood at only $672.

So the government formulated the country's first gold import policy with special focus on increasing gold ornament export from Bangladesh.

Bangladesh Bank last year sought applications for the appointment of gold dealers under the gold import policy.

Forty-seven applied for the dealership while 18, including a private bank, got the temporary licence for two years.

The companies are Modhumoti Bank, Diamond World, Jewellery House, Rotno Gold Corner, Aroosa Gold Corp, Amin Jewellers, Sreeja Gold Palace, Jarwa House, Milon Bazar, SQ Trading and Eng, MK International, Amin Jewellers Ltd, Buraq Commodities Exchange Co, Golden World Jewellers, Riya Jewellers, Laxmi Jewellers, BDEX Gold and Diamond, and D Damas.

Eleven measures were incorporated in the policy giving Bangladesh Bank the right to appoint dealers for importing gold bars.

As per the policy, the dealers could be an authorised bank, an individual-owned firm, a joint venture or a limited company, which will be allowed to bring in gold bars directly.

Manufacturers of ornaments will purchase gold only from these dealers.

It was made mandatory for the dealers to import gold through bonds, for which a bond licence is a must.

Agarwala said they could not import gold even after getting the dealership licences from the central bank because of high import cost -- Tk 2,000 specific duty for each 11.66 grams, 15 per cent value-added tax (VAT) and 5 per cent advance tax (AT).

The government withdrew VAT and AT on gold import from this fiscal year and importers have to pay Tk 2,000 as specific duty for every 11.66-gram gold.

The withdrawal of the VAT has reduced import cost, according to Agarwala, also general secretary of Bangladesh Jewellers Samity.

He said Diamond World would import 500 kilograms of gold this fiscal year to make jewellery for domestic and international markets and also to sell to traders.

Diamond World will require up to 200 kilograms of the precious metal for its own use and the rest for the traders, according to Agarwala.

He said his firm applied to the NBR for bonded warehouse licence for gold in order to export jewellery.