Behind the gems and jewellery shine

The gems and jade industry attracts its share of interest and controversy. Given Myanmar’s endowment of the precious jewels, it’s a huge revenue-generator – a Harvard report issued in 2013 estimated it brought in US$8 billion in 2011. Yet most of that revenue comes from exporting unprocessed jade and gems, and industry body the Myanmar Gems and Jewellery Enterprise Association would like to add more value to local jade by not just mining it but finishing it as well.

The Myanmar Times’ reporter Shwegu Thitsar sat down with U Yone Mu, to discuss the industry’s prospects on the road ahead. U Yone Mu took over as rotating chair from the Myanmar Gems and Jewellery Enterprise Association from U Tay Za, after the latter stepped down. U Yone Mu, who was previously first vice chair, won an association-wide election on August 25 with 302 of the 585 total votes. He is also owner of Sane Lin Yadanar Jewellery Company, and is keen to see Myanmar transition to exporting finished jewels instead of raw gems and jade.

“I know I will face enormous pressure as a chairperson. I will work to develop the finished-products market for the benefit of members – then we will generate more profits,” said U Yone Mu.

First off, could you tell me about the activities the association will be conducting now that you have taken the role of rotating chair?

It’s been business as usual but we’ve added some rules and regulations. We are seeking to make sure every member gets their opportunities in full. Last week we formed a committee with the intention to be more transparent. We also opened gems and jewellery stalls in Myanmar Gems Showroom under the aegis of the association.

How many members are in the association, and where are they located in the country?

Jewellery-shop owners, gem-mining investors and gems and jewellery traders have all joined the association. There are more than 8000 members to date.

Can you contrast the past and present as far as jade mining permits are concerned? I have heard some jade mines have been closed. Can you discuss why this is, and which mines are allowed to run?
Because of instability in some areas, the process of granting new permits for mining in Hpakant [in Kachin State] and Mongshu [in Shan State] have halted, though current investors can extend their mining permits and are allowed to keep on excavating. The current level of excavation is enough to satisfy the market. New licences haven’t been granted at the moment in order to preserve natural resources for future generations.

Companies are sometimes added to a blacklist kept by the Ministry of Mines forbidding them from mining or exhibiting gems for a variety of reasons. Which companies are on the blacklist?

Companies on the blacklist are not allowed to conduct jade mining in Myanmar. But the list isn’t publically available, so I don’t know how many companies are blac,knklisted and which ones they are.

Companies that break the rules on exhibiting gems can be prevented from exhibiting for 10 subsequent exhibitions, while firms conducting unlicensed mining can have their permission to mine gems and jade revoked permanently. The Ministry of Mines also sends out inspectors to mining sites to check up on them.

A lack of transparency has been a concern for the jade and gems market. Could you tell me what the association is doing to be transparent?

We’ve formed a committee to issue news and information in real time, and we also have a website that everyone can visit. We are also thinking of publishing a journal.

There are challenges for businesspeople in the mining sector at present. Could you explain the situation? In particular, some mines were forced to halt last year due to the political situation. Is there consequently a shortage in the jewel market?

The cost for excavating jewels is getting higher and higher because investors now also have to take part in environment conservation. But the market overall is cool because the economy particularly in Western countries is weak. However, the best quality jewels and jade are earning high prices even though the market is cool. I want to say that the price of the best quality jewels never goes down even when the economy is in a downturn.

In current market conditions, what kinds of jewels are popular in international markets and what is popular for Myanmar buyers?

Jade is the most popular jewel sold in Myanmar and it supports the export sector. In the past it’s been the third or fourth most important item on Myanmar’s export list. Subsequently it was not at the top of the list because of the global economic downturn and cutbacks in selling jewels to preserve this resource for future generations.

The excavation process is also difficult. Basically, the deeper the mine, the more difficult to excavate.

China buys 80 percent of our jewels, and is by far the biggest buyer. Hong Kong and Thailand follow respectively.

The second-best sellers are rubies and sapphires. Thailand buys most of them and so do Western countries.

As you say, the most in-demand Myanmar jewels are jade, rubies and sapphires. Where are they extracted?

Jade is mostly found in Hpakant in Kachin State and also some at Hkamti in Sagaing Region, whereas rubies are found in Mogok in Mandalay Region.

Some jewel exporters have complained they face a double tax, having to pay tax locally and again when they export their products. What is your stance on the issue? Can we say these taxes cause the black market? And do you have any views on whether the tax rate is fair compared to international standards?

It’s better for businesspeople in the jewel sector to do business while paying official taxes. Particularly if they are conducting an auction [which is difficult with black-market jade and gems] they might get an unexpectedly high price.

Selling openly after paying taxes generates a higher price. When a jewel is sold on the black market, the seller won’t get the price it is really worth. So I would like to urge everyone to do business officially.

All businesspeople selling products locally have to pay a 10pc tax. And they have to pay a 10pc tax when exporting their products. So they have to pay tax the two times.

The tax rate in Myanmar is at an international level, but I will give suggestions so the tax rate is not a burden for traders. We are discussing it, and have given suggestions to the Internal Revenue Department. Our association is just an NGO; our action is just to build bridges between jewel traders and the government.

As new chair of the Myanmar Gems and Jewellery Entrepreneurs Association, is there anything else you would like to talk about regarding development of the jewel sector?

In China there are more than 90,000 workers depending on the jade market. I would like to focus on creating job opportunities for millions of Myanmar people by boosting production of finished goods [rather than exporting raw jade and gems].

For ages we have done business in the raw materials market. We should move toward a value-added market as quickly as possible.


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