KATHMANDU, May 6, 2012
Citing their inability to supply gold during marriage and festive seasons, yellow metal dealers have urged the government to open import of gold through hand carry, allowing Nepalis residing abroad for at least six months to bring in as much as 5 kg of gold to manage supplies.
Though dealers presently receive 20 kgs of gold from the commercial banks, as provisioned by the Nepal Rastra Bank, they claimed the supply was falling far short to meet local demand, which soars during marriage season and festivals.
“The ceiling set by the central bank is fine for off seasons. But as we have marriage season and other festivals almost every alternative month, we have consistently failed to manage supplies with the volume supplied to us,” said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers Association (Negosida).
While the frequent scarcity has been troubling consumers, both in terms of supply as well as fair pricing, dealers too have been complaining that it has been affecting their businesses during peak demand period.
Referring to such a situation, the association had recently held talks with senior NRB officials to resolve the problems. But after the central bank declined to help, say gold import in just 8 months of 2011/12 has already crossed over Rs 16 billion - which is higher than its liking, the association has knocked on the doors of Ministry of Finance (MoF).
“We are not seeking immediate changes in the provision. But given that gold holds special meaning in individual and social life, there has to be some permanent solution to the current problem. Hence, our push for change is from the new fiscal year,” said Shakya.
Presently, the government allows Nepalis to bring in only up to 350 grams of gold through hand carry luggage. Till a few years ago, Nepalis residing abroad for more than 6 months were allowed to bring in as much as 10 kgs of gold through hand carry.
But after the import suddenly rose to over Rs 41 billion in 2009/10, which contributed in a sharp rise in trade deficit and depletion of foreign currency reserve, the government tightened its import.
Though Nepalis in recent years, particularly after stock and real estate market slide, started putting in their money on gold to take profit out of soaring international prices, NRB had primarily assessed that unprecedented rise in import was due to illicit outflow of yellow metal to India, where import duty was much higher than in Nepal.
Following such assessment, the government jacked up the import rates and also lowered the import through hand carry to 1 kg per person in 2010/11 and further limited it at 350 grams per person in this fiscal year.
As lowering import limit through hand carry raised transaction cost, dealers are barely getting any supply though that source.
“The provision has helped the economy greatly, but turned the market jittery. Unfortunately, this is giving rise in illicit inflow of gold during seasons when demand rise, distorting prices and also resulting in massive outflow of Indian rupee,” said Shakya, pushing for the relaxation in the provision.
Source: Republica
Citing their inability to supply gold during marriage and festive seasons, yellow metal dealers have urged the government to open import of gold through hand carry, allowing Nepalis residing abroad for at least six months to bring in as much as 5 kg of gold to manage supplies.
Though dealers presently receive 20 kgs of gold from the commercial banks, as provisioned by the Nepal Rastra Bank, they claimed the supply was falling far short to meet local demand, which soars during marriage season and festivals.
“The ceiling set by the central bank is fine for off seasons. But as we have marriage season and other festivals almost every alternative month, we have consistently failed to manage supplies with the volume supplied to us,” said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers Association (Negosida).
While the frequent scarcity has been troubling consumers, both in terms of supply as well as fair pricing, dealers too have been complaining that it has been affecting their businesses during peak demand period.
Referring to such a situation, the association had recently held talks with senior NRB officials to resolve the problems. But after the central bank declined to help, say gold import in just 8 months of 2011/12 has already crossed over Rs 16 billion - which is higher than its liking, the association has knocked on the doors of Ministry of Finance (MoF).
“We are not seeking immediate changes in the provision. But given that gold holds special meaning in individual and social life, there has to be some permanent solution to the current problem. Hence, our push for change is from the new fiscal year,” said Shakya.
Presently, the government allows Nepalis to bring in only up to 350 grams of gold through hand carry luggage. Till a few years ago, Nepalis residing abroad for more than 6 months were allowed to bring in as much as 10 kgs of gold through hand carry.
But after the import suddenly rose to over Rs 41 billion in 2009/10, which contributed in a sharp rise in trade deficit and depletion of foreign currency reserve, the government tightened its import.
Though Nepalis in recent years, particularly after stock and real estate market slide, started putting in their money on gold to take profit out of soaring international prices, NRB had primarily assessed that unprecedented rise in import was due to illicit outflow of yellow metal to India, where import duty was much higher than in Nepal.
Following such assessment, the government jacked up the import rates and also lowered the import through hand carry to 1 kg per person in 2010/11 and further limited it at 350 grams per person in this fiscal year.
As lowering import limit through hand carry raised transaction cost, dealers are barely getting any supply though that source.
“The provision has helped the economy greatly, but turned the market jittery. Unfortunately, this is giving rise in illicit inflow of gold during seasons when demand rise, distorting prices and also resulting in massive outflow of Indian rupee,” said Shakya, pushing for the relaxation in the provision.
Source: Republica
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