Govt Plans to Open Gem Industry Hub

By Tha Lun Zaung Htet 8 January 2013

RANGOON—The Burmese government plans to establish a jade and gemstone center in the capital Naypyidaw, where it hopes traders and investors will open stores and processing industries for the precious stones, a government official said on Monday.

Thein Swe, managing director of Myanmar Gems Enterprise of the Ministry of Mines, said it would invite businessmen to settle at the planned “Jade stores, Jade Industry and Gem Market” in order to create a business hub for Burma’s gem industry in Naypyidaw.

Thein Swe said new center would offer business benefits to the gemstone merchants, adding that businessmen would benefit from being located at the new capital, which was developed in secrecy under the previous military regime.

“After government moved the capital to Naypyidaw in 2005, jade and gem auctions were held mostly in Naypyidaw. Now we try to establish the Jade Stores, Jade Industry and Gem market [here] because we want it to be more convenient for traders and investors to do business,” he told The Irrawaddy.

“Some investors and traders want to open jade stores and some want to have a gem market in the new capital. So, that is the main reason” for the creating the center, he said.

The government has prepared 91 plots for jade stories and jade industries which would be offered for sale at US $375,000. At the gem market 19 smaller plots would go on sale for $263,000 each, according to Thein Swe.

Myanmar Investment Commission would have to approve foreign investment in the business center, Thein Swe said, adding that foreign investors were welcome, but only if they set up gemstone processing industries

“We never allow foreign investment in the jade and gem excavation sector, but we will allow market and value-added production of jade and gems. Foreign investors who want to invest in those kinds of sectors need government permission,” he explained.

Some gem dealers doubted if the plan to establish a gem trade and processing hub would work, as similar projects by the government have previously been unsuccessful.

“General Khin Nyunt, the former spy chief, also tried to establish a jade and gem industry and market, but failed,” said Hla Win, a local gem dealer.

He said Burma lacked the sophisticated technology required to process gemstones and create value-added products with the precious stones. “If we really want to develop that sector, we should try to get high-quality technology,” Hla Win said.

Burma produces 90 percent of the world’s rubies, sapphires and fine-quality jade. It holds several sales fairs per year called “Gems Emporiums,” with sales valued at billions of dollars.

In March last year the government held the 49th emporium in Naypyidaw. The previous fair in 2011 saw record sales worth $2.8 billion, while a 2010 event generated $1.4 billion. About 9,000 visitors came to the 2011 event, Reuters reported. Most major buyers are from China, while Taiwanese and Thai traders also attend in large numbers.

However, gem sales have since slumped after China’s economic growth slowed down and the Chinese government increased import taxes on Burmese products, doubling the taxes on jade and gems from 15 percent to 33 percent.

Minister of Commerce Win Myint said the tax hikes had been a major blow for Burma’s gem trade. “Usually, we got billions of dollars in income from [gemstone] auctions, but after Chinese authority increased taxes on jade and gem buyers to 33 percent, our income dropped tremendously,” he said.

The trade in Burma’s rich gemstone resources—most of which are located in northern Burma, including in Kachin State—has long been surrounded by controversy, as it has serves as a major source of revenue for Burma’s military and ruling elite, and their business cronies.

Kachin rebels have funded their ongoing insurgency against the government by controlling jade mines and the control over these resources has been a point of contention between the warring parties.

US sanctions have sought to restrict trade in Burmese gemstones but the measures have had little effect on the trade, as most jade and gems are sold to China and other Asian countries, from where the stones can also find their way to western markets.