Disparity in customs duties on imported gold works has diverted gold trade from Saudi Arabia to Dubai despite the existence of a unified GCC customs duties system, a key jewel expert in Jeddah told local media.
In Saudi Arabia, gold traders have to pay 5 percent of the value of gold works imported into the Kingdom whereas traders in Dubai are paying 0.5 percent of that value on the ground that Dubai is a wholesale and re-export market, former head of gold and jewelry committee at Jeddah Chamber of Commerce and Industry (JCCI) Jamil Farsi said.
Earlier, wholesale gold traders from Sudan, Egypt, Libya, Morocco and other countries used to purchase gold from Saudi markets. Naturally, gold traders abstained from buying gold from the Saudi market and opted to Dubai due to increased excise duties in Saudi markets, he said.
This unfair competition has gravely hit gold trade in the Kingdom and shifted gold trade center from Saudi Arabia to Dubai, he noted.
The jewel expert counted a number of reasons, which contributed to the shift of gold trade to Dubai, including ease of visa procedures and non-existence of intermediaries in Dubai where (Indian) traders used to showcase products in Dubai markets, which brought positive results for the business there.
He said India had earlier invited Saudi traders to purchase gold from the country instead of Dubai, which could have minimized fees of brokers and automatically led to price reductions.
India has weighed Saudi Arabia as the most important and biggest gold market globally, he said.
For his part, former member of gold and jewelry committee at JCCI Mohamed Azouz said certain obstacles, including visa formalities, existing in Saudi markets had either compelled traders to go to Dubai or fully stopped business in the market.
If the concerned authorities did not find appropriate solutions to difficulties facing the Kingdom’s gold industry, the industry would be vulnerable to “disappear,” Azouz warned.