Aug 19 - 25, 2002


Syed Faisal Hashmi is working as consultant to World Gold Council for Pakistan. Currently he holds the office with the objective of stimulating gold demand in jewellery and investment sectors in Pakistan market. having earned the experience in local gold market, he possesses the inside knowledge about the existing situation and what should be done on individual and government levels to make this sector more productive and better contributor towards Pakistan's economy. At the age of 29, he carries with him a valuable combination of education and experience. Since the beginning of his career, after completing MBA, he has worked in multinational environment.

PAGE: What is the importance of gold in this part of the world?

FAISAL HASHMI: Gold, as jewellery, has always been in demand in this part of the world. It is not only a symbol of prosperity but also an investment. It is a tradition in our society that mothers/mothers' in law wish to pass on to their daughters/daughters' in law, which they have received from their ancestors. With dollar becoming less attractive and declining interest rates there is a gradual shift towards investment in gold. The availability of gold bars, of guaranteed purity, now also encourages people to invest in this precious metal. However, a point of concern is that such gold bars mostly come to Pakistan through informal channels. These bars are ultimately bought by the jewellers for preparing jewellery.

PAGE: What is the role of World Gold Council?

FAISAL: It is basically an organization established and funded by gold miners. The core objective of World Gold Council (WGC) is to promote gold demand in the form of jewellery as well as investment in gold bars. Another, but most important, objective is to advice the governments to minimize restrictions on movement of gold across the borders. Movement of gold through legal channels gets documented which also reflects in GDP, through value addition, and also help in revenue collection. I believe that too much control proliferate smuggling. In such a scenario both the government and investors/buyers are the losers.

PAGE: What is your estimate about the inflow of gold into Pakistan?

FAISAL: According to conservative estimates annual consumption of gold in Pakistan is around 120 tonnes. Out of this only 25 tonnes is imported officially and an equal quantity is brought in the shape of jewellery. Another 8 to 10 tonnes of gold is recycled production of jewellery through remelting. The remaining quantity is brought through informal channels. The value of 120 tonnes of gold is estimated about Rs 75 billion. If the total quantity is imported officially and only one per cent duty is charged, it would still contribute Rs 750 million towards the national exchequer.

PAGE: What are the reasons for inflow of such a large quantity through informal channels?

FAISAL: In the past the GoP wanted to have stringent controls on inflow of gold into the country. Only a few entities were allowed to import which created monopolization on the trade. According to the latest Trade Policy now any one can import gold. This step combined with one per cent duty will help in eliminating the incentive to bring in the precious metal through informal channels. Let me tell you that Pakistan is not the only exception. In India, previously large quantities of gold were smuggled but with the liberalization of laws the import through official channels has increased manifold.

PAGE: In what form normally gold is brought into Pakistan?

FAISAL: Gold is normally traded in bars of different weights and purity levels. In India and Pakistan gold jewellery fabricators mostly rely on a small cast bar denominated in tolas, weighing ten tolas equivalent to 3.75oz or 116.638g. Being lightweight it is the world's most preferred gold bar. The ten tola bar dimensions are approximately 44mm (height), 27mm (width) and 5mm (thickness), with a usual millesimal gold purity of 99.9 per cent. The bar has smooth, rounded edges. Another important feature is that the bar has no serial number, unlike almost all other cast bars available on the international market.

PAGE: What is Pakistan's annual export of jewellery?

FAISAL: Pakistan exports jewellery worth US$ 20 million. This comprise of gold as well as precious stones. As oppose to this, jewellery export from India constitute nearly 15 per cent of its total export. The reason Pakistan has not been able to boost its export is lack of use of technology. This means, lack of production of high quality gold jewellery at large scale. For example globally the sale of one single item, wedding ring, is in millions but Pakistan cannot cater to this demand due to lack of massive production facilities.

PAGE: What other measures can help in promoting local sales and export of jewellery?

FAISAL: Buyers of jewellery are never certain about the purity standard. This can be achieved by 'hall marking'. This will give the confidence to buyers and also a reputation to jewellery merchants. The GoP should also create facilities for the training of craftsmen and facilitate import of machinery for large scale production of jewellery. Our aim should be large volume not a few hundred pieces of large weight.