The cabinet yesterday approved the first-ever gold policy for the country aiming to make import and export of the precious metal easy, stop its smuggling, and ensure transparency in its trade.

The main aim of the policy is to increase gold ornament export, Cabinet Secretary Shafiul Alam told reporters after the cabinet meeting chaired by Prime Minister Sheikh Hasina yesterday.

He said in the first phase of the policy implementation, there would be no duty on gold imports, just VAT. At every stage of the import and sale, hallmarks on the bars would be mandatory and the ratio of alloys used would be specified.

He also said within six months of the policy issuance, traders would declare their stocks of gold and other precious metals to the VAT authorities. Every month, they would have to submit balance sheets of their sales to the VAT authorities.

In the world market, India supplies 80 percent of the handcrafted gold ornaments, according to the Bangladesh commerce ministry. It said in 2016, India exported gold ornaments worth $42 billion while Bangladesh officially exported ornaments worth just $672.

According to commerce ministry documents, Bangladesh's annual demand for gold is between 20 and 40 tonnes and almost 80 percent of it is met by smuggled gold and the rest by recycled gold.

This deprives the government of a huge amount of revenue and creates scope for money laundering and accumulation of black money.

The existing rules allow import of gold, subject to permission from Bangladesh Bank. But in reality, gold has never been imported through legal channels since independence.

Between the country's independence and early 2015, 2.2 tonnes of seized illegal gold worth $90 million had been added to the foreign currency reserves.

Big hauls of the precious metal make headlines and indicate that gold is often smuggled into the country.

The cabinet secretary said the amount of gold one could bring into the country in his or her luggage, under baggage rules, could be increased.

EASING GOLD IMPORT

To ease gold import, 11 measures have been laid out in the policy.

Bangladesh Bank would appoint dealers for importing gold bars. The dealers could be an authorised bank or an individual-owned firm, or a joint venture or a limited company. Bangladesh Bank would formulate a guideline for the dealers who would import gold bars directly.

Manufacturers of ornaments would not be able to buy gold from others, apart from those dealers.

The dealers would be allowed to import gold through bonds, but for that they would have to get bond licences. They would also have to inform Bangladesh Bank about their requirement of foreign currency and have to obtain no-objection certificate from it.

The central bank would issue NOC within 15 days upon receipt of a dealer's application.

Jewellers would inform dealers of their demand and pay them 5 percent in advance.

In case a jeweller buys recycled gold from a customer, the jeweller has to preserve a copy of the national identity card or passport, and address of the customer.

BOOSTING EXPORT

The draft policy proposes several incentives for increasing export of gold ornaments, including tax benefits, especially for handcrafted gold ornaments.

Gold ornament makers would also be given subsidies for exporting gold items, be it handcrafted or machine made.

Duty benefits would be given to exporters who would import bars and then export gold ornaments.

Land would also be allotted to exporters for setting up factories in special economic zones.

Bangladesh Bank would set up a central information bureau that would keep information on the annual demand for gold, its local trade, import and export, revenue collection, seizure of gold, its sale on auction, and other relevant data.

MAKING OF POLICY

The finance ministry last year requested the Transparency International Bangladesh (TIB) to come up with recommendations for formulating a gold policy.

Later, the finance ministry sent the recommendations to the commerce ministry that formed a nine-member committee with representatives from the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the TIB, gold traders, and related ministries and agencies.

The committee then formulated the draft policy and in May the cabinet committee on economic affairs approved and forwarded it to the cabinet.

CABINET DECISIONS

The cabinet yesterday also approved Customs Act, 2018, and the National Environment Policy, 2018.

The cabinet secretary said in 1992 the first National Environment Policy was enacted where 15 sectors were identified for preservation. The number now has been increased to 24, including land management, water resource management, hill preservation, protection of environment through public private partnership initiative.