Gold Import Restraint

Gold is one of the highly-desired precious metals in the world. It is a ductile and least chemical reactive solid element.  It is mostly demanded for jewelries, investments and industrial use. It is estimated that around 50 per cent of the global demand of gold is for jewelries, 40 per cent for investment purpose and 10 per cent for industrial use. Moreover, gold is regarded as the symbol of power, beauty, purity and accomplishment in most of the cultures across the globe. In Nepal, gold is mostly demanded for jewelries, and lately for a portfolio of investment. For Nepali people, gold jewelries are not only means to demonstrate their richness but also to carry out personal beautification and cultural activities. Though this yellow metal gold is regarded as a luxurious item, majority of people including those living unprivileged life cannot boycott its use, thanks to its cultural value. 

Currently, many entrepreneurs have been involved in the business of gold silver and other precious gems investing billions of rupees and creating many jobs. The government is now allowing importing only 10 kg of gold per day through commercial banks. Currently, gold is the fourth highest imported item of the country in monetary value. In last fiscal year 2021/22, the country imported gold worth Rs. 42.7 billion. During the first six months of the current fiscal year, the import of gold stood at Rs. 29.2 billion which is higher by 25.5 per cent as compared to the same period of last fiscal year. As per the news published in this daily on Tuesday, gold and silver entrepreneurs have again raised their voice to make the arrangements for adequate supply of raw gold for the development and promotion of gold and silver businesses. 

Organising a press conference, entrepreneurs also demanded for proper laws, policies and procedures to manage the bullion market. According to the Federation of Nepal Gold and silver Dealers' Association, the supply of   gold  is  not  sufficient,  businessmen  are  facing  unnecessary  harassment from the security agencies and the state has not shown interest in making  necessary  policies,  rules  and  guidelines  related  to  gold  and  silver  businesses. The federation  claimed  that  the gold traders  were  facing  unnecessary police actions like confiscating  of   the  gold  ornaments  legally  brought  from  the customs  checkpoints  and causing unnecessary hassles.  The federation said that  it  was  a  must  to  remove the existing quota system to  create  an  environment  to  run  the  business  smoothly.  The existing   quota system has affected the bullion business both in high and low demand seasons.  He claimed that the supply will not be high even if the quota system is removed. 

Businessmen have opined that the quota system is appropriate only during the time of economic crisis stating that the demand for raw gold use to be around 40 kg in season and 10-15 kg in off-season. The demand of the gold and silver entrepreneurs sounds good from the perspective of the traders but as the gold is high-valued import item, the government should take caution while addressing their demand as significant increase in gold import can push the country's balance of payment again to the deficit. Since the country has recently come out from spiral of balance of payment deficit, it will be better to increase the quota of gold import if the balance of payment continues to remain favourable rather than abolishing the quota system.