Billions dollar worth of jewelries exported to Switzerland

Billions dollar worth of high-grade jewelries have been exported in the last two years from Vietnam to Switzerland, where the jewelries are smelted to get gold.

The Financial Times has reported that there has been a growing tendency over the past two years that Vietnamese businessmen have been trying to export high-grade gold jewelry to Switzerland as a trick to “dodge” the current laws which prohibits bullion gold exports.
In Switzerland, the jewelries are smelted and then cast into bullion gold. Vietnamese businessmen want to export jewelry to Switzerland because the country in the north of Europe is famous for the smelting industry which can turn all gold-made products into gold bullions with international standards.
Statistics showed that before 2008, Vietnam only exported a small amount of gold of 3.2 tons of jewelry to Switzerland, earning 71 million francs or 77.5 million dollars. However, things have changed in the last two years, as Vietnam has become a big source of imported gold products for Switzerland. Most of the jewelry from Vietnam has come to the furnaces of big manufacturers such as Argor-Heraeus, Metalor, MKS Finance and Valcambi.
The newspaper has quoted Cameron Alexander, a senior analyst of GFMS precious metals consultancy as saying that in Vietnam, enterprises are not allowed to export high grade bullion gold. The ban has prompted Vietnamese enterprises to process bullion gold into jewelry with high title of gold and export the jewelryfor dollars. The problem is that Vietnam prohibits businessmen from exporting bullion gold, but does not prohibit them from exporting jewelry. This is a big loophole of the laws and many businessmen have exploited it.
In 2010 alone, Vietnam exported nearly 61 tons of precious metals to Switzerland, mostly under the mode of gold-made products, reaping 2.6 billion francs, or 2.8 billion dollars, according to the Swiss Federal Customs Administration. The figures were 54 tons and 1.9 billion francs in 2009 (the figures do not include the exports of bullion gold). Especially, the exports to Switzerland increased sharply a few times when the gold prices in Vietnam were lower than the prices in the world market.
Local newspaper VnExpress has quoted a representative from an enterprise which is a member of the Vietnam Gold Business Association, as saying that “Vietnamese enterprises have to take a roundabout to export gold, when the domestic prices are much lower than the world’s prices”. The executive said that in 2009 and 2010, enterprises must be granted quotas to be able to export bullion gold. Meanwhile, quotas were granted a few times and with limited export volumes. Therefore, enterprises decided to export jewelry because it was much easier to export jewelry, while the exports were not imposed tax. And the enterprises turned bullion gold into jewelry to export.
The executive has revealed that Swiss importers pay for the jewelry the same prices as they pay for bullion gold. “As such, exporters could not earn money for the processing into jewelry. However, they still could earn fat profit, when the domestic prices were lower than the world’s prices,” he said.
“The strict control over the gold exports has forced enterprises to play such a trick,” he added.
In Vietnam, bullion gold is considered “monetary gold”, therefore, the government has decided that bullion gold imports and exports must be strictly controlled and have quotas.
He also said that he knew a gold company which exported 7-8 tons of jewelry at once in 2009-2010, and that he thinks the statistics released by the Swiss agency can truly reflect the real exports.
In fact, Vietnamese management agencies have realized that enterprises played tricks to circumvent the laws. Therefore, the Ministry of Finance decided to impose the tax rate of 10 percent, starting from January 1, 2011, on material gold and high grade jewelry instead of the zero tax rate that was previously applied.
According to the General Department of Customs, in 2010, Vietnam imported 1.1 billion dollars worth of precious stones, precious metals and products, an increase of 124.7 percent over the last year. Meanwhile, Vietnam exported 2.82 billion dollars worth of products, up by 3.4 percent. Meanwhile in 2009, the export turnover of the products was 2.73 billion dollars, while the import turnover was modest at 492.1 million dollars.

VietNamNet, VnExpress

Posted in: Business,Vietnam