“If gold holds firm and exporters remain as ambitious as they are exports should touch a billion dollars—if not in this fiscal year most likely in the next year,” says an official of Pakistan Gems & Jewellery Development Company (PGJDC). The company is organising the first-ever Pakistan International Gems & Jewellery Exhibition in Karachi between August 5-8 to showcase a variety of gold ornaments before prospective foreign buyers. More than two dozen exporters are participating from across the country.

“Buyers from India, Turkey and Bangladesh have committed to visiting the exhibition and buyers from other countries may join in,” says chairman, All Pakistan Gem & Jewellers Merchants Association Mr. Mazhar Ali Saeed.

“Plain and studded bangles, earrings, necklaces, lockets and rings and other ornaments manufactured through computerised machines would be on display. We hope to sell volumes of jewellery on spot and win export orders as well.”

PGJDC which began operations in April 2007 has somewhat reordered jewellery industry through extensive skill enhancement and product refining programmes besides effectively coordinating with the government to boost exports.

It has established training centres for jewellery makers in Karachi, Lahore, Quetta, Peshawar and Gilgit. Besides, the company has introduced computerised designing and manufacturing of latest Pakistani and Italian style jewellery in Karachi and Lahore centres, each equipped with nearly a dozen dedicated computer systems.

“I know of at least three top jewellery exporters, two in Karachi and one in Lahore who purchased state-of-the-art computers worth Rs10 million each. Using a software called Accurate Matrix these computers produce accurate designs of hundreds of patterns and help in preparing moulds for jewellery manufacturing that cannot be obtained through manual designs.”

Supported by the ministry of production and industries, PGJDC is also launching one assaying and hallmarking centre each at Karachi and Lahore. Assaying is the process of precise mixing of copper and silver in pure 24-caret gold to obtain 21 or 22-caret yellow metal required for jewellery making. And hallmarking is the process of inscribing onto the pieces of jewellery the quality of gold use in their making.

This quality assurance helps in attracting top buyers from across the world. 'Machines for both centres have been imported and these are expected to be operational within three months. The assaying and hallmarking centres would be run by independent bodies to be set up for this purpose,” said an PGJDC official. .

Exporters say, that would help them grab a larger share in markets and explore new markets. Currently, bulk of jewellery is exported to the US and the UK, Canada, Germany and the UAE. Recently Bangladesh has also started importing Pakistani jewellery.

Exporters are allowed zero-rated imports of gold against their export shipments. And they also use gold obtained from recycling of old jewellery. Industry sources say that the economic slowdown in domestic economy in FY09 accelerated sales of old jewellery by families struggling financially. This has enhanced the share of recycled gold to roughly 60 per cent in new jewellery manufacturing. But imports also shot up 271 per cent to 4749 kg in FY09 to cater to growing demand of the yellow metal from exporters.

“We can increase volumes of jewellery exports immediately if the customs officials at the airport ensure clearance of gold imported against jewellery exports within 24 hours,” says Mr Mazhar Ali Saeed adding that it takes just two hours in Dubai to get gold imports cleared at airports.

He and other exporters say that the Customs officials at Karachi airport take as long as ten days to clear gold import consignments which eventually keep delaying delivery of export orders by as many days.

“Demand for Pakistani jewellery is rising fast and we need to keep dispatching export consignments quite often. But because of the delay in clearance of imported gold our artisans sit idle for many days. This causes loss of precious men hours besides delaying export orders,” said one Karachi-based exporter.

Gold dealer Haji Haroon says, jewellery exports can be increased also by allowing commercial imports of gold if the government withdraws the two percent tax on them and restore the old rate of customs duty of 50 US cents per tola.

“Whatever gold import we see today is made against jewellery exports. Commercial imports have almost stopped. By reducing the tax on commercial imports, the government can ensure timely supply of gold not only to exporters of gold jewellery but also to artificial jewellery makers.”

Because of ever-rising gold prices, reduction in people's disposable income in last two fiscal years and increase in frequency of street crimes, consumption of artificial jewellery is catching up fast. Hundreds of shops in Karachi and Lahore deal exclusively in imitation jewellery the bulk of which is imported from China and India and only a small portion is produced in Pakistan.

Jewellery exports, particularly those of gold jewellery studded with precious stones can be increased significantly by exploring Chinese markets where people normally use plain jewellery.

Higher demand for jewellery among neo-rich consumers of China and strong appetite in the Middle East has helped India in registering 160 per cent increase in its gold jewellery exports to $785 million just in April this year. This has more then compensated for the shortfall seen earlier in jewellery exports to the US and the Eurozone countries.

Whereas China itself is emerging as a big exporter of plain gold and artificial jewelleries with export earnings estimated to have reached $12 billion in 2009, demand for jewellery in Chinese markets is outweighing local supplies.

“We can take our jewellery exports to new heights by penetrating into Chinese markets first by exporting fine quality of plain jewellery and then by making our studded-jewellery popular among Chinese customers,” says a Karachi-based exporter.—Mohiuddin Aazim