April 10, 2007	Tuesday	Rabi-ul-Awwal 21, 1428

KARACHI, April 9: Pakistan’s gold imports declined by 57.35 and 50.35 per cent in terms of quantity and value, respectively, in July-February 2006-2007 as compared to the same period last fiscal.

Stakeholders in this business have given a mixed view.

Some market players attribute the fall to the imposition of one per cent wealth tax on import stage in the last budget, which paved the way for smuggling of the yellow metal from Dubai.

Others blame rising gold prices in the local markets which depend on international rates, forcing the market players to go slow on imports.

According to the Federal Bureau of Statistics (FBS), import of gold tumbled to 8,704 kg ($151 million) in July-February 2006-2007 as compared to 20,496 kg ($305 million) in the same period last fiscal year.

“The decline in gold imports has nothing to do with the increase in international prices. The imposition of wealth tax on imports at import stage has resulted in fall in gold imports,” Chief Executive of Almas Gem and Jewellers at Zaibunisa Street Saddar, Saeed Mazhar Ali told Dawn on Monday.

According to him, gold import used to cost Rs32 per tola, including import duty and income tax ahead of announcement of 2006-2007 budget. After the imposition of one per cent wealth tax, the cumulative impact of duty and tax comes to over Rs290 per tola.

If the cumulative duty and tax impact exceeds over Rs150 per tola, official gold imports automatically switch over to smuggling. And it was what has been happening after 2006-2007 budget as increase in duty and tax has resulted in thriving smuggling of gold in the country, mainly from Dubai, he said.

Saeed said fall in gold imports do not mean that yellow metal consumption has also come down in the country.

Gold demand has either been pegged as usual or it has been showing an improvement as demand is being met through smuggling.

He said gold demand has increased in Pakistan which is evident from the opening of new shops in various localities as compared to the gold shops that existed in city’s decades old areas.

Many new local investors have arrived in this business.

However, according to calculation made by Chief Executive of Tessori Group, Akhtar Khan Tessori, the rate of duty and tax for gold import now comes to Rs230 per tola as compared to Rs62 per tola before budget.

As a result, official gold imports have fallen sharply, thus affecting the official arrivals.

He added that imposition of duty and tax has led to flourishing gold smuggling.

Increase in international rates also forces market players to adopt wait and see attitude towards future gold import plan, but the main reason of fall in gold imports is increase in duty.

He said currently one per cent wealth tax is charged on import.

The chief executive of Raees Jewels International at The Forum Clifton, Raees uddin Shaikh said people had restricted their hands towards gold buying due to increase in local rates and also because of increase in their cost of living mainly because of price hike in essential prices and other expenditures.

As a result, market players had either opted to suspend gold imports or restricted it to limited quantities owing to thin demand from buyers.

Gold trade also depends on demand and supply and much depends on the daily rates fluctuations.