Kathmandu, Jan. 18: Once dominated by the Newars, the indigenous inhabitants of Kathmandu valley, it seems, their gold business is slowly losing out to Indian traders. Though they are small in numbers, Nepalese jewelers see the foreign capital investment as a great threat to local businesses, which have been operated, on a small scale for centuries.
However, it is not only the influx of Indian traders that worries President of Nepal Gold and Silver Dealers’ Association (Negosida) Tej Ratna Shakya so much, as the credibility of the business which is at stake.
“We receive a lot of complaints at the Association about the quality of gold that these new jewelery shops sell,” says Shakya. He cited an example of a jewelery shop at Bishal Bazar (super market) at New Road, which was selling 22 carat gold as 24 carat.
Gold jewelery is no longer what it used to be, say customers. ‘There is a lot of mixture in the gold available in some of the shops established recently.’
Surprisingly, there are very little complaints in this business. ‘Only about 5 per cent of the customers come to return the gold items.’
Many people believe that the practice of cheating customers has been going on unchecked due to lack of laws in this direction.
Nepal consumes “about 10 tons of gold annually”. In a bid to control the gold and silver business, the government, from the current fiscal year, has made Nepal Rastra Bank, country’s central bank, the authorised wholesaler of these precious metals.
However, the Department of Mints (DoM), the branch of the central bank looking after the gold and silver business, sells only about 8 to 10 pieces of 50-gram gold biscuits a week, that too during the marriage season. If it is so, where does all the gold Nepal consumes come from?
Last year, the country’s total transaction was for “12 tons of gold”. Since the start of the current fiscal year, the DoM has sold only 6,050 gram of 24 carat gold so far, according to the director of the DoM Madhav Adhikari. This clearly shows there is something fishy in this business. Despite the government’s attempt to keep a tab on gold and silver business, the private sector is finding enough loopholes to carry on its business on the sly.
But the problem with the Department is that it can’t sell gold of various denominations. One of the reasons why the DoM has not been able to attract many people may be that it has no choices. It sells only 50 gram gold pieces,” the cashier at the DoM Jyoti Prasad Bhandari explains.
Although the DoM sells gold with a focus on gold dealers they simply do not entertain buying gold from the government body. “But if they come to know that the price of gold is going to be high by noon they would flood at the counter of the Department,” Bhandari said.
However, during the three days of Tihar, the second greatest festival of the Hindus, ‘the DoM did a business worth Rs. 17.6 million’.
Meanwhile, a jeweler, on condition of anonymity, said that many jewelers prefer buying gold from Surya Traders and Laxmi Jyoti Traders at Ason rather than go to the DoM. “Buying gold from the DoM is not practical. We can’t buy gold on credit and the time is also not suitable,” he said.
As to why they don’t like to buy gold from the DoM, jewelers add “the price of gold being sold from the DoM is comparatively high.”
“The price of gold being sold from the office could be dearer than that of other places because we add the administrative expenses with the real price of gold,” Bhandari said.
“We do not buy gold from the DoM. The gold sold from the DoM is expensive. We buy from the market, from ordinary people and Lahures (soldiers),” says Nabin Tuladhar of Laxmi Jyoti Traders, the retailer and wholesaler of gold and silver metals.
The Trader is supposed to be one of the famous suppliers of the precious metals. The owner, Tuladhar, says that they sell about 40 tolas of gold everyday. “The quantity may go as high as 60 tolas during the festival or marriage season.”
Kathmandu valley is the main business centre for gold in the country. Out of the total gold business, 60 per cent of the transactions are made in the capital.
According to the proprietor of the City Gold Jewelery, New Road, many old jewelery shops like to do business with regular customers. “We are like family jewelers. 90 per cent of my customers have been visiting the shop since my father’s time. And it is the case with many other shops owned by the Newars,” he says.
As to why they are not able to compete with the newly opened jewelery shops owned by the Indians, he says that they lack capital to expand their business and that they can’t spend much on decoration of their showcases with readymade jewelery.
“But whoever goes to the shops owned by the Indians, he/she can’t be a permanent customer there,” he says, probably hinting that the Indians jewelers were showy and not trustworthy.
Shakya, meanwhile, is of the opinion that the government should immediately begin working out laws and policies to address the problems of the gold and silver business. The Negosida, which was the wholesaler of gold business till last year and which still determines the daily value of gold and silver, currently has nearly 300 members.
“We help, govern and punish our members as per our rules and regulations but it is not practical to check all when there are over 1,000 jeweler members in the country.
Presently, there is no clearly defined mechanism for the punishment of the wrong doers. And, mixing inferior metals to gold is on the rise, according to Negosida.
“If the government formulates an appropriate and practical law, the gold and silver business will become more credible. And there may be healthy competition among the businessmen.”
But the tragedy has been that there are very few Nepalese goldsmiths remain, he adds. The younger generation no longer wants to take up the profession of a goldsmith.
As to rumours that the gold being brought from Bangkok is not pure, Shakya says that the claim may have a grain of truth. “But only some amount of gold comes from Bangkok these days. The gold from Bangkok comes in the form of ornaments by the people who visit the city. Nepal is a market for gold that comes from Hong Kong and Singapore. Meanwhile Indian gold is also pure,” Shakya discloses.