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Monday, 16 January 2017

(The Star) Gold jewellery exports to drop 10%

PGA says decline to RM7bil from RM7.77bil in 2015 due to payment requirement
GEORGE TOWN: The Penang Goldsmith Association (PGA) is projecting the value of Malaysia’s gold jewellery exports to hit about RM7bil in 2016, lower by about 10% from RM7.77bil in 2015.
PGA adviser Joeson Khor told StarBiz the decline was not surprising because of the requirement by the Government for local gold jewellery exporters who have registered for Approved Traders Scheme (ATS) or Approved Traders and Manufacturers Scheme (ATMS) to accept only LBMA (London Bullion Market Association)-certified gold bars as payment.
Since April 1, 2015, gold jewellery manufacturers have to register with the Finance Ministry for the ATS or ATMS to import gold bars.
“The exporters have to accept only LBMA-certified gold bars as payment, should they want exemption from GST for the export of their finished gold products.
“Since there is a shortage of LBMA-certified gold bars in the market, this has led to the delay of purchase and payment of gold jewellery products from Malaysia, affecting the value of jewellery exported,” he said.
From January to November 2016, the value of gold jewellery exported was RM6.35bil.
“We expect the final figure to be about RM7bil for the whole year of 2016,” he said.
The price of gold per ounce is about US$1,187, compared to US$1,130 last month, which was the lowest in December 2016.
The price of gold is expected to stay stable for the rest of the year, which would spur more buying from the consumer market, according to Khor.
Khor added that the buying trend from overseas is expected to resume in the second half of 2017.
“As the global economic uncertainties are seen to persist in 2017, we can see investors turning once again to gold as a safe haven to park their money and to hedge against inflation.
“We foresee more buying this year from the Middle-East.
“This is why PGA urged the government to soften its stand on the use of LBMA-certified gold bars as payment for gold jewellery products from Malaysia,” he added.
On the domestic sales of gold jewellery products, Khor said the retail sales has dropped by more than 30% in 2016.
“The value of gold products imported for 2016, which was RM2.75bi from January to November 2016.
“The figure should be around RM3bil for the whole of 2016, compared to RM3.01bil in 2015.
“Due to the drop in retail business, the import of gold products has also remained flat,” he added.
Since the implementation of the goods and services tax (GST) a year ago, small and medium-sized gold jewellery manufacturers and exporters have found it hard to give competitive credit terms to overseas buyers.
“Small and medium-sized gold jewellery manufacturers and exporters have to spend between RM700,000 and RM1mil in GST to import the gold bars used to make the jewellery products.
“A small-sized company needs to spend between RM100,000 and RM200,000 to import the gold bars, which impacts the small and medium size gold manufacturers’ capability to export and stay competitive in the market, influencing the volume and value of gold jewellery products exported.
“About 80% of the gold jewellery products exported from Malaysia come from Penang-based gold jewellery manufacturers and exporters,” Khor said.
Khor said more than 60% of the 650 PGA members were small and medium-sized companies with an annual turnover of less than RM25mil.
The LBMA is an international trade association, representing the London market for gold and silver bullion which has a global client base.
This includes the majority of the gold-holding central banks, private sector investors, mining companies, producers, refiners and fabricators.

The on-going work of LBMA covers a number of areas, among them refining standards, trading documentation and the development of good trading practices.