Diamond World becomes the first applicant for gold import dealership

Five months after Bangladesh Bank issued a dealership licensing guideline for importing gold, Diamond World, on Thursday, became the first jewellry store to apply for a dealership.

Diamond World applied for the dealership through Dhaka Bank, according to a Bangladesh Bank source. Dilip Kumar Agarwala is the managing director of Diamond World. He is also the general secretary of the Bangladesh Jewellers Samity (Bajus).

Dilip Kumar Agarwala said the requirements asked by Bangladesh Bank for issuing dealership license is difficult for jewellers to comply with.

The major requirements include capital of Tk 1 crore, own vault, non-refundable fees of Tk 5 lakh. These tough conditions would make jewellers reluctant to apply for dealership license, Dilip Kumar opined.

"If BB gives us license without making the process lengthy, it will encourage others to come forward to have a license," he added.

On March 11, Bangladesh Bank issued the dealership licensing guideline, but did not get any response from the jewellers over the last five months; although, 700 jewellers are involved in gold business in Dhaka.

According to the guideline, interested jewellers will have to apply for a dealership license by September 30. Through the guideline, Bangladesh Bank aims to stop gold smuggling by legalizing and regulating gold import.

In June, the National Board of Revenue (NBR) organised a ‘gold fair’ for the first time, at which over 1,200 jewellers paid about Tk175 crore in taxes to legalize their undeclared stock of gold, diamond, and silver.

While speaking to The Business Standard, NBR First Secretary (Customs Policy) Abul Bashar Md Shafiqur Rahman said: “NBR has undertaken a lot of initiatives to stop gold smuggling. The gold policy, enacted by the commerce ministry, is also an important element among these initiatives.” “Since one company has, finally, applied for a dealership, I believe other jewellers will eventually do the same,” he added.  

Bangladesh's annual demand for gold hovers between 20 and 40 tonnes, almost 80% of which is met by smuggled gold, thus depriving the government of a significant sum in taxes. This also creates scopes for money laundering and accumulation of black money, according to industry experts.

The government moved to formulate a ‘gold import policy’ as the Customs Intelligence and Investigation Directorate seized huge volume of gold from the showroom of Apan Jewellers at Gulshan as the company had been unable to show valid import documents regarding the precious metal.

In order to encourage formal import, NBR has slashed the duty on gold import under the baggage rule.

According to NBR, gold traders and goldsmiths can legalize undeclared and stocked gold and gold ornaments by paying Tk1,000 per bhori. For cut and polished diamond, the rate has been set at Tk6,000 per carat. In case of silver, jewellers will have to pay Tk50 per bhori, according to a notification issued by NBR in May.

Anyone with a trade licence, VAT registration and taxpayer identification number will be able to declare their undisclosed gold to the tax officials.

In November last year, the government framed ‘gold policy’ in order to clean up the gold trade, make import and export easier, stop smuggling and ensure transparency in the business.