FGCCC to reduce customs duty on manufactured gold

The Federation of GCC Chambers of Commerce and Industry (FGCCC) is considering reducing the customs duty on manufactured gold from 5 percent to 2 percent per kilo.
Saudi gold manufacturers are unhappy with this plan.
In other GCC countries, gold traders are required to pay 2 percent customs duties on imported manufactured gold. Therefore, Saudi gold retailers called for implementing the same rule in the Kingdom to open the door for more imported gold.
Currently, the customs duty on one kilo of gold is estimated at SR 10,000, while the new move would reduce the customs duty to SR 1,500 per kilo.
“We have meetings with gold experts from GCC countries to discuss the reduction of customs sduties on gold and jewelry in the Kingdom to bring it on par with the rest of the GCC,” said Abdulrahim Hasan Naqi, secretary-general of the FGCCC. “This would have a positive impact on the industry
According to Naqi, the new move would set a limit on hikes in gold prices, as the cost of the gold would be reduced by 3 percent.”
Majdi Al-Raiyes, gold trader and member of gold committee at the Jeddah Chamber of Commerce and Industry (JCCI), told Arab News that the new move would unify the customs system of GCC countries.
“In Saudi Arabia a trader is not required to pay customs duties on raw gold,” he said. “For manufactured gold, however, he would have to pay 5 percent duties based on the material itself and the manufacturing. The new move is to stop the duties on the material, which count for 3 percent, and pay only a 2 percent duty on the manufacturing.”
He predicted this step would reduce the cost of gold and raise the competition among GCC traders.
Gold retailers will benefit from the new move, once it is applied, said Al-Raiyes.
“This can help the local gold investors to adopt new designs and styles and compete in the market,” he said.
Gold manufacturers are unhappy with the new move, saying it might kill the gold industry in the Kingdom.
“This step will end the gold jewelry industry in the Kingdom and will allow foreign gold retailers to enter the Saudi market,” said Mohammed Jamil Azzouz, member of the gold and jewelry committee at JCCI. “This decision is contradicting the Labor Ministry’s Saudization plan, as it will open the door for gold traders from China, Korea, Singapore, Turkey and Italy to compete in the Saudi market.”
According to Azzouz, such a step would also allow individuals to work in gold sales even if they don’t have the skills or any experience in that regard.
He added: “If the gold retailers want to have the same trading system as other GCC countries do, we as ‘gold manufacturers’ call for having the same facilities that other GCC countries offer their gold manufacturers. We can’t copy the Emirate’s model in terms of gold trade unless we have the same work system and facilities.”
According to Azzouz, many challenges are facing the gold industry in Saudi Arabia.
“If the government reduces custom duties on gold retailers, the manufacturers will not be able to compete or to gain profits, so they wont be able to pay the extra taxes for expat workers. On the other hand, manufacturers won’t be able to train Saudis to work with them either,” he said.
“Training a Saudi gold seller takes eight years of workshops, in addition to a high salary. In contrast, gold retailers will import from foreign factories and cooperate with foreign workers in the Far East and other GCC countries, so they won’t be required to pay taxes or apply the Saudization plan.”