Thailand-Myanmar Colored Stone Trading
The full launch of ASEAN Economic Community on December 31st, 2015 is an important step in creating opportunities for Thailand-Myanmar trading of colored stones. Myanmar still maintains a rich variety of colored stone resources, and its government is focusing on democratic reform and gradual transformation to capitalist economy. Meanwhile, Thailand aims to become the world’s gem and jewelry trading hub by 2020, and the incoming flow of colored stones is one of the most important driving factors in this respect. Therefore, it is expected that close collaboration between gem and jewelry sectors of both countries will develop in the near future.
Myanmar Gemstone Resources
Myanmar has a large variety of abundant natural resources, especially in gemstones. It gains reputation as one of the richest sources of natural gemstones, including jade, ruby, sapphire in various colors, spinel, peridot, topaz and pearl. Its pigeon’s blood ruby from Mogok mine is said to be the most beautiful in the world. Myanmar is also recognized as the largest producer of jade. According to Ministry of National Planning and Economic Development, in the fiscal year 2015-2016 (April - March), Myanmar produced as much as 31 million kilograms of jade, 0.17 million carats of ruby, 0.74 million carats of sapphire, 0.29 million carats of spinel, 0.34 million carats of peridot and 1.63 tons of pearl. Its major gemstone sources are in Mogok, Monghsu, Phakant, Khamti and Namya.
Burmese ruby has the most beautiful color and the highest quality in the world. Most are found in the city of Mogok, which is 200 kilometers away from Mandalay. Blue sapphire and some semiprecious stones, such as zircon, spinel, moonstone and peridot, are also found in Mogok mines. Now over one thousand mining operations are granted concessions in Mogok area, among which are a few large mines operating as joint ventures owned by the military government and local private companies at the share of 55 : 45, for example Ruby Dragon Co.,Ltd. (In the past, all these large mines belonged to the government.) Other medium and small mines are owned by local companies which are granted concessions from the government.
Another large source of ruby is in Monghsu, at the south of Shan State. Ruby found in this area is lower in quantity and quality in comparison to those found in Mogok. Therefore, gemstone enhancement is necessary; some are sent for heat treatment in Thailand, both in Mae Sot, Tak province, and in Chanthaburi province.
Apart from Burmese ruby and sapphire, which are highly recognized in the global market, Myanmar also produces the world’s best quality of jade called “Imperial Jadeite Jade”, which can be found at Phakant mine in Myitkyina, Kachin. Medium-quality jade called “Nephrite Jade” can also be found in this mine. Another important source of imperial jadeite jade is the district of Khamti in Sagaing region, where two jade mines are situated: Nansibon and Natmaw.
Colored stones and jade can also be found at other sources in Shan State, such as, ruby in Namhsan deposit and Pyinglon deposit; and in Kachin State, such as ruby and spinel in Namya deposit.
Access to Gemstone Supply in Myanmar
In the past, it was difficult to gain access to gemstone resources in Myanmar due to strict control by the government. As a result, most gemstones were illegally transported from the mines through unofficial channels. Now the government has relaxed its regulations to allow more open trading and facilitate the access to these resources. Today Burmese gemstones can be accessed through various channels as follow:
* Myanmar Gems Emporium This auction is held three times a year at Naypyidaw by Myanmar Gems Enterprise. The first two are in March and July each year and allow foreigners to participate, while the third one in December is open only for Burmese traders. Gemstones in these auctions include rough and polished ruby, blue sapphire and semiprecious stones, as well as jade and pearl from mines owned by the government and private companies. Each year there are over 4,000 buyers in the auctions, contributing over 3,400 million US dollars of income. The transactions are conducted in Euro currency. Those who sell gemstones at the auction must send them for appraisal and pay the government at 20% of the appraised price, and if the gemstones are successfully sold at the auction, the additional 25% of the auction price must be paid. Participants have to register on the website, www.mge.gov.mm, in the name of their company only. After being accepted to the auction, participants must transfer the minimum deposit of 10,000 Euro for the bidding limit of 200,000 Euro, while the jade auction requires the minimum deposit of 50,000 Euro for the bidding limit of 1 million Euro. The deposit must be transferred to the Myanmar Economic Bank (Naypyidaw Branch) at least one month before the auction day. If any participants wish to spend more than the basic limit, additional deposit must be paid at 5% of the bidding limit needed. The total bid amount must be paid within two months after the auction, and the gemstones must be received by buyers themselves.
* Myanmar International Gems, Jewellery & Watch Expo This exhibition is held twice a year. The first one is in April or May at Myanmar Gems Trade Center in Yangon by the Union of Myanmar Federation of Chambers of Commerce and Industry, while the second one is in November or December at the Diamond Plaza in Mandalay, being organized by Myanmar Gems and Jewelry Entrepreneurs Association, in collaboration with the Mandalay Region Gems Association. Colored stones sold in this exhibition are largely polished ruby and blue sapphire from mines in Myanmar, as well as semiprecious stones, some of which come from Burmese mines while others are imported from Thailand. The purchase tax is imposed upon each transaction at the rate of 15%. The seller is responsible for this tax payment. (The tax has already been added to the product price.)
* Local Gemstone Markets The main gemstone trading center in Yangon is Scott Market, or Bogyoke Aung San Market. In this market, there are over 100 small shops selling gemstones including ruby, blue sapphire, jade and pearl, as well as gem-studded jewelry. Colored stones are from Mogok and Monghsu. At the back section of the market, tearooms are available as meeting places for brokers to trade their gems, including minority people from various local tribes, as well as owners of gemstone shop. In addition, at the center of Mogok is Panchan-Htar-Pwe Market, which is the largest gemstone market. Every day hundreds of brokers and sellers set the tables for gemstone trading. The business is done in the morning, before they move to find more customers at Pan-Ma Market, another large market in Kyatpyin area, west of Mogok.
* Direct Trading with Mine Owners Most gemstones found in business areas or local markets have average quality. If buyers are looking for stones with beautiful color and high quality, most will contact mine owners directly. This channel is mostly used by customers who have long business relationships with the mine owner. For new customers, they might begin with buying at the local market, and then ask for information from dealers or brokers around the area. These people might help in introducing the customer to the mine owner.
Gemstone Trading in Myanmar
Gemstone trading in Myanmar is in wholesale and retail through various channels. As for trading among local businesses, both rough and polished stones can be traded, with 15% of commercial tax and 25% of income tax on profit for large-scaled enterprises, while small businesses are exempted from income tax on profit. As for export, only polished colored stones are allowed. The export company has to pay taxes at a total amount of almost 50%, and the export can be done only by the companies which hold license from the government.
In the case that foreigners buy gemstones from shops or companies in Myanmar, the buyer should request a receipt from the shop to declare to the customs on departure. (Usually there are no receipts for gemstone purchase at local markets.) This should help them avoid any complications that may arise at the checkpoint. Although now the Burmese law does not limit the quantity of gemstones sold to foreigners, in practice, the authority still impose strict control over gemstones sold to foreigners in high quantity.
Since Myanmar has just opened to international trade and is in a gradual process of country development, there might be some inconsistencies between the law and the actual practice, and the system still has not been improved to meet the international standard. The government maintains strict control over gemstone trading and imposes a high rate of tax, resulting in the use of connections and bribe offered to the officials for more convenience in exporting products to overseas customers. Therefore, over 70% of gemstone trading activities are off the record.
Moreover, since Mogok is a restricted area due to its status as a source of highly precious gemstones, foreigners who wish to enter the town must ask for permission and pay a fee at around 100 US dollars per person. Local people are needed to run this process and prepare the documents. The time required for approval is around two weeks.
Thailand-Myanmar Gemstone Trading
Thailand and Myanmar have established their gemstone trading for a long period of time, thanks to their shared border. Most trading activities happen through the border, with over 80% of the products being transported through this channel, including colored stones. Both precious and semiprecious stones are brought through the border by Burmese traders to sell to their Thai counterparts.
In general, there are two forms of colored stone trading between Thailand and Myanmar. The first one is official, legal trading, when gemstones have been put through the tax process before selling to Thai customers, and the export is declared to the Customs Department. According to Thailand’s Customs Department, from January to October 2016, Thailand has imported gemstones (HS Code 7103) from Myanmar at the total value of around 1.14 million US dollars, decreasing by 14.42% in terms of value from the previous year. Actually, Thai and Burmese traders have estimated that the real value of gemstone trading between Thailand and Myanmar should be many times higher than this record. The second form is off-the-record trading, in which gemstones are smuggled from the mine. Burmese traders hire workers in the mine to bring these gemstones along the woods to avoid government officials who keep a watch on the main roads. Small-sized gems in small quantity can be hidden in clothing, hair or personal belongings of women, children or the elderly, while for large-sized highly-precious stones, the trader needs to depend on a trusted worker and plans the trip carefully. Gemstones are often smuggled through Thailand border in the area of Chiang Rai, Chiang Mai and Tak. Since tax payment adds much more cost and involves complicated regulations, as well as verification process, most choose the second option in gemstone trading.
Mae Sai-Tachileik border and Mae Sot-Myawaddy border are important checkpoints where gemstones from Myanmar have flowed into Thailand from past to present, but most colored stones are transferred through Mae Sot-Myawaddy border in Tak. (Occasionally, Burmese traders also bring gemstones to sell to Thai traders in Chanthaburi.) The transactions often take place at Mae Sot market, on Prasatwithi road at the center of the town, which is the largest gem and jewelry trading center in Tak, and the country’s second largest after Chanthaburi, as well as Rim Moei market, which is situated near the Thai-Myanmar Friendship Bridge. Since a large part of trading is done in underground activities, there is no clear record of export and import value. Some gemstones bought from Burmese traders might be heated and polished in Tak, while others are sent to Chanthaburi for treatments before distributing in Bangkok and exporting around the world. It is widely known that colored stones which have been put through the value adding process in Thailand, including heat treatment and polishing by high-skilled craftsmen, have strong demand in the global market. The heat treatment technique is Thailand’s important know-how which gives competitive edge to Thai industry over other competitors.
Strengthening Collaborative Relationships
As neighboring countries with shared border and long political and economic relationships, Myanmar and Thailand have developed their relations both in public and private sectors. They make visits and seek ways to cooperate in terms of gemstone trading and shared developments in gem and jewelry industry. Connections between gem and jewelry sectors in both countries are based on sustainable mutual benefits in a win-win situation. It is expected that more collaborations between Thailand and Myanmar will soon be developed to strengthen their connection in the global supply chain of gem and jewelry.
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