Iran's gold import increased

Business Materials 17 January 2011 11:49 (UTC +04:00)

Azerbaijan, Baku, Jan. 17/ Trend, A.Yusifzade /

In the first seven months of the current Iranian year (started March 21) Iran imported about 59 tons of gold worth $2 billion. This hints at the increasing trend for trade of this precious metal inside the country and Iran's potentials for being active in this arena.
Over 59 tons of raw gold were imported in the said period while in the entire previous year the country imported 22 tons of gold.
In the first half of this year, Iran imported 54 tons of gold worth $1.766 billion. Some 5.2 tons of gold was imported in October leading to the total imports in the first seven months of this year to stand at 59.2 tons. Most of the gold was imported from Turkey, the UAE, Russia and Switzerland, IRNA reported.
Deputy head of the trade commission of the Iran Chamber of Commerce, industries and Mines (ICCIM), Hamid Hosseini in October said that eight percent importation of gold shows the interest of officials for import of the capital goods, which is very good news. He recalled that previously this level of import pertained to gasoline which is a consumer good, but now it applies to capital goods.
"Imports worth $40 billion some 30 percent to 40 percent of which pertains to consumer goods harms local production sector although based on the statistics released by the Islamic Republic of Iran Customs Administration (IRICA) the level of imports of consumer goods is 15 percent.

The rise in import of raw gold, which is processed by experts of gold and jewelry industry, was enthusiastically received by gold-makers and also people active in foreign trade, as they believe that Iran can reach a favorable status by processing raw gold and re-exporting it.
Among countries similar to Iran, Turkey has the highest turnover in the gold sector with $28 billion while Thailand with a turnover of $18 billion is among important Asian countries that have managed to promulgate the gold and jewelry industry.
Gold industry requires a great deal of capital and people engaged in this industry are obliged to use large amounts of circulated capital to purchase raw gold in the form of ingots and this by itself increases the price of gold.

Gold industry relies on human resources and hence it has generated new job opportunities. If this industry is more organized it can create abundant value added for the national economy.
A member of Iranian Board of Directors of the Union of Producers and Exporters of Gold, Jewelry, Silver and precious Stones Hamid Farrokhi said at present turnover of the global gold market is about $920 billion per year.
Farrokhi added that at present 4000 production units are active in the country in the gold and jewelry sector, which is not sufficient given Iran's potentials.
"In fact, these production units currently are grappling with many problems and unnecessary red tape has limited their powers for vying against foreign rivals in the global markets," he pointed out.
Value Added Tax
Income tax and Value Added Tax (VAT) are among significant concerns of people active in the gold sector and continuation of the present trend can eventually paralyze the national gold and jewelry industry.
Farrokhi emphasized that tax indices for gold industry are high.
"Many people think that activists in the gold sector have huge incomes. This is while the high turnover of this sector is mostly because of the price of raw gold and the profit made on each gram of gold is about 1,000 rials ($0, 10). This is why people active in gold sector are opposed to being subjected to VAT. When VAT is levied, sellers of gold are obliged to charge an extra three percent for taxation, which is a very high figure in view of the high price of gold and ruins the incentives of potential buyers. This leads to a bust in gold market," he pointed out.
He recalled that levying VAT on imported gold results in three percent hike in the prices of raw materials used in jewelry making and this imposes many restrictions on the competitiveness of Iranian jewelry in the international markets.
"At any rate, the members of the union have accepted implementing the law on VAT," he said.
International Exhibitions
Elsewhere in his remarks, Farrokhi said presence in international exhibitions for introducing Iran's capabilities is an important approach for competing in international gold markets.

He noted that participation of companies that produce jewelry in international exhibitions given the special conditions for transfer of related products to the venue of exhibitions and ensuring security of this transfer process are extraordinarily important and require all-out cooperation of various organizations.
"However, in Iran the needed infrastructures for this do not exist," he added.
He underlined that banks in Turkey are perpetually alongside producers of gold and jewelry as the investor.
"Capital is the main tool in gold industry and easy access to cash for procuring gold as raw material for boom of this industry is very significant," he said.

Banking Support
Farrokhi recalled that in Iran the banking system does not stand alongside the gold industrialists.
"Turkey, Thailand and Hong Kong, as important regional and global hubs for production of jewelry... have attracted governmental support and currently control a key portion of the international market for this industry. Studies of the union reveal Iran has the needed capabilities to have its fair share of the global gold market if the officials sufficiently heed this industry," he said.
He emphasized that the union serves as a bridge between the government and producers.
"The union started its activities early this year. It has consulted with university professors and expert activists in gold and jewelry sector and facilitated training of the personnel in applied sciences universities. Beginning from the next academic year, the first group of students will be accepted in the said universities," he noted.

Given the existence of gold mines in Iran and the special status of Iranians in producing artistic works, some experts believe that expansion of gold industry in the country is not beyond reach.
These experts maintain that if the necessary ground is paved for expanding this industry, many new job opportunities will be generated in small and big workshops. Attracting Iranian artists to this industry marks a golden opportunity for promoting Iranian art and culture.