Gold prices may be fixed according to 'new system'

Bangladesh Jewellers' Association reached a preliminary decision on determining the price of gold, including value -added tax (VAT), making charges, and other factors. The decision will be finalised this month. The price of good quality 22 carat gold may then go up to nearly Tk 80,000 per bhori.

Presently the price of 22 carat gold per bhori in the country is Tk 72,666. And per gram the price is Tk 6,230. If Tk 250 making charge is be added, the price will be Tk 6,480 per gram. If 5 per cent VAT is added to that, then the price of one gram of gold will total Tk 6,804. Ultimately, the price reaches Tk 79,361 per bhori.

Bangladesh Jewellers' Association held its extraordinary general meeting (EGM) at a conventional hall in the capital city on Wednesday, presided over by the association's president Enamul Haque Khan. Central and district leaders of the association, as well as general jewellery traders, took part in the meeting.

Bangladesh Jewellers' Association general meeting at a convention all in the capital on Wednesday
Courtesy: Bangladesh Jewellers' Association

At the meeting it was decided to re-fix the price of gold, taking VAT and making charges into consideration. It was also decided to create a housing project for the members of the association. It was said that the attention of the prime minister and the finance minister would be sought to discourage foreign investment in the sector until the local gold business was firmly established and also to cut down the VAT rate and bring dishonest VAT officials under control.

While a preliminary decision was taken at the meeting regarding VAT, making charges, and the price of gold, there remains a dilemma over the final decision. The association president Enamul Haque said, "If the price is fixed with VAT and making charges, the price of gold will be alarmingly high. However, 70 per cent of the businesspersons at the meeting agreed on the decision. Even so, we are in a dilemma over the matter. The traders at a district level have reacted strongly in fear they will lose customers and face huge losses."

He said they would hold a meeting on the issue by 15 February with the executive committee and top businesspersons and then take a final decision."

In the meantime, general secretary of the jewellers' association, Dilip Kumar Agarwalla, told Prothom Alo, "We are thinking of taking only VAT into consideration when fixing the price of gold, not making charges. We will hold a meeting shortly, but first will consult with the National Board of Revenue (NBR). If there is a circular to include VAT in the price, then a meeting may not be required." He said that the price of silver may be determined similarly.

The jewellers' association for quite some time has been considering the inclusion of VAT and making charges in the price of gold. This was supposed to have come into effect from 1 January this year, but there was opposition from certain influential businesspersons. They had planned on demanding a cut in VAT rates. The leaders have now decided to take the views of the other gold businessmen and then proceed with a decision.

A section of the businessmen fear that the price of gold may exceed Tk 80,000 per bhori if VAT and making charges are included. Also, most businesses outside of Dhaka do not pay VAT. The jewellers in Dhaka's big markets pay VAT. If the prices are fixed in keeping with the process, many businessmen may not agree and this will create problems.

Vice president of Bangladesh Jewellers' Association, Dewan Aminul Islam, told Prothom Alo, "Whether now or later, we must introduce transparency in our business. Presently there is both VAT and making charges, so the price won't increase for now." He said if VAT and making charges are included in the price of gold, the small businesses won't suffer. He said it would the big businesses that would face pressure.

The jewellers' association presently fixes the price of gold based on the international market and the country's bullion market. But with the volume of legally imported gold not adequate, the price per bhori of gold in the local market is always Tk 4000 to Tk 5000 higher than that of the international market. With fluctuations in the international market, the price of gold was adjusted 14 times last year alone. At the start of last year, gold was Tk 60,361 per bhori. Despite the gold prices falling five times over the year, it ultimately increased by Tk 12,305 per bhori.