Jade Profits Expected to Drop as Emporium Kicks Off in Capital
By Kyaw Hsu Mon 24 June 2015
RANGOON — Burma’s 52nd Gems and Jade Emporium, which began on Wednesday, is expected to reel in lower sums as a result of a new spending policy and high supply.
The annual showcase of both state-owned and private sellers’ gem lots is Burma’s largest legal wholesale gems outlet for foreign buyers, drawing traders from around the globe for some of the rarest and most valuable gems on the market. The emporium will take place from June 24 to July 6 in the capital city of Naypyidaw.
While last year’s event attracted more than 4,000 foreign buyers and netted about 2.6 billion euro (US $3.4 billion), this year is expected to be less lucrative, with industry experts attributing the losses to a new collateral policy and a sharp rise in high-quality stones following the resumption of mining in northern Burma late last year.
State-owned Burma Gems Enterprise enacted new regulations this year requiring foreign traders to demonstrate a minimum balance of €50,000 for every one million euro pledged. The policy was created after several foreigner buyers defaulted on enormous bids in recent years. Successful bids are usually paid off in monthly installments, but many buyers were falling behind on their debts.
“Last year, some traders won the auctions but didn’t make payments on time. They used to be allowed to purchase as much as they want with only a €50,000 deposit, so some broke their promises,” explained Min Thu, assistant director of the Myanmar Gems Enterprise.
Min Thu said he hoped the policy will weed out unreliable buyers, bringing in only the “real foreign traders,” which, according to this year’s initial figures, may mean staggeringly lower attendance than in years past.
As of opening day, only about 2,000 foreign traders had registered for the emporium. Most customers are based in the region, flying in from China, Hong Kong, Taiwan and Thailand. Min Thu estimates that about 3,000 local traders will also attend, but international clients are usually the biggest spenders.
Vendors have welcomed the new policy, according to Mandalay Myanmar Gems and Jewelry Entrepreneurs Association central committee member Aung Thein. On paper, sales from previous emporia appear artificially high, he said, as sellers weren’t able to collect all the money or move the product.
“We’ve been cheated in the past by some foreign traders who broke their promises,” Aung Thein said. “They won the auction but they didn’t pick up the jade and gems. We lost time, money, many things.”
This year’s emporium will offer a total of 8,934 jade lots and about 320 lots of various other gems, including highly coveted Mogok ruby.
The number of jade lots has risen sharply this year as mining resumed in mineral-rich Hpakant, Kachin State, last September. Operations were halted in 2012 because of renewed conflict between the Burmese government and the Kachin Independence Army, an ethnic armed group that controls much of the country’s hinterlands. The area is known as the source of the world’s finest jade deposits.
Only about 7,160 jade lots were on sale in 2014, compared to about 10,000 in 2013 and 15,000 in 2012. As production climbs back to pre-hiatus levels, industry experts said, prices are expected to drop proportionally. Last year’s most valuable lots belonged to Mandalay-based Tharyar Kyinue Phwe, selling at about $60 million for 233 kilograms.
While the emporium is the country’s primary wholesale market, the gems trade is believed to be far more expansive. Research by Harvard University’s Ash Center estimated that China imported about $7.9 billion of jade in 2011, while new data from the Chinese government, published by financial consultancy firm New Crossroads Asia, indicates that China imported $12.3 billion in jade in 2014.