SCHEME OF PRESENTATION

3. Human Resource and budget of the organization

GEMS & JEWELLERY

GEMS & JEWELLERY EXPORT OF PAKISTAN

Export Trend During FY 2007 to 2011
S. N o SECTOR FY July-June (07-08) FY July-June (08-09) FY July-June (09-10) FY July-June (10-11) Change in FY11 compared to FY10

Value

%age

Gems & Jewellery

221

288

641.677

407.347 (234.330)

(36.52)

Export Trend During July March 2011-12 vis--vis 2010-11

FY July-March (11-12) FY July-March (10-11) Change

S. No

SECTOR

Value

%age

Gems & Jewellery

587.195

280.186

307.009

109.57

%age share of Gems & Jewellery in Minerals & Metals Exported from Pakistan(2010-11)
Sr. # 1 Product Petroleum Products %age 67.98
80

%age Share
70 67.98 60 50
40

2
3 4 5 6 7 8 9 10 11

Gems & Jewellery

Chromite Dimension Stones Talc (Soap Stone) Salt Iron Ore Gypsum Fluorspar Lead & Zinc Copper Ore

20.43
5.95 3.03 1.46 0.39 0.36 0.15 0.10 0.05 0.03

30
20.43

20 10
0
5.95

3.03

1.46 0.39 0.36 0.15 0.1 0.05 0.03 0.03 0.02 0.01

12
13 14

Coal
Manganese Ore Others

0.03
0.02 0.01

PAKISTAN GEMS
Geologically, Khyber Pukhtoonkhwa, FATA, Northern Areas and Baluchistan (alongwith the border of Afghanistan) and Azad Kashmir represent the favorable environment for the formation of precious and semi-precious gemstones. The loftiest mountains of the world, the Hindukush, Karakoram and Himalayan mountains host almost entire gem potential of Pakistan including fascinating mineral specimen. Major potential deposits of Gemstones include Emerald, Ruby, Topaz, Aquamarine, Periodot etc. Mining of Gemstones in Pakistan is being done through primitive methods and subsequent cutting & polishing of stones is also traditional not matching to international standards. Pakistan also lacks in fashion designing and sophisticated cutting & polishing of stones. This is the main reason that Pakistan has not been able to penetrate in the international market which is evident from the fact that Pakistans share in Gemstones export is less then 1% i.e. US$3.81 Million in 2010-11 in the total world exports of around US$ 93 billion.

POTENTIAL GEMS RESERVES IN PAKISTAN

KHYBER PAKHTUNKHWA Gems Emerald Pink Topaz Peridot Ruby Aquamarine Tourmaline AZAD KASHMIR Ruby 12.5 Million Carats Swat Mardan Hazara & Kohistan Location Reserves 70 Million Carats 9 Million Carats 10 Million Carats 1.5 Million Carats 0.2 Million Carats 0.1 Million Carats

Northern Areas

GEMS - WORLD RESERVES (PAKISTAN SHARE)

World Reserves 5000 Million Carats

Pakistan

100 Million Carats

Pakistan Share in World

2%

Top 10 Gems Exporters 2010 Values in

Million US$
World-Top 10 Gems Exporters 2010 Total Million US$= 93,624.60 World-Top 10 Gems Exporters 2010 Total Million US$= 93,624.60

Top 10 Gems Importers 2010

Values in Million US$ World-Top 10 Gems Importers 2010 Total Million US$= 93,626.73 Asia-Top 10 Gems Importers 2010 Total Million US$= 44,344.86

PAKISTAN GEMS-Product wise Analysis (FY2010-11) & (FY2009-10)

Sr. No HS Code Products July-June (Quantity) Unit
1 2 3 4 5 6 7 8 9 10 11
71011000 NATURAL PEARLS 71012200 CULTURED PEARLS WORKED GM GM

July-June (Value) (10-11)

0.188 3.177 0.001 0.435 0.001 0.003 -

(10-11)
0 0 116330 0 14237375 4110 1461169 0 5500 18270 0

(09-10)
16 3269 741151 1833 27692299 0 4275599 2100 193870 283896 5

% Change
(100.00) (100.00) (84.30) (100.00) (48.59) #DIV/0! (65.83) (100.00) (97.16) (93.56) (100.00)

(09-10)
0.001 0.000 0.152 0.033 2.930 0.465 0.000 0.016 0.144 0.000

% Change
(100.00) (100.00) 23.55 (100.00) 8.41 #DIV/0! (6.31) (100.00) (95.01) (97.81) (100.00)

71021000 UNSORTED, (ROUGH) DIAMONDS GM OTH NON-IND DIAMOND 71023900 WORK,N-MOU GM UN-WORKED/SIMPLY SAWN PRE71031000 STON GM RUBIES,SAPPHIRE,EMERALD 71039100 WORKED GM OTH SEMI/PRE STONES WORKED 71039900 N.S GM 71041000 PIEZO-ELECTRIC QUARTZ OTH UN-WORKED SAWN,SYN 71042000 PRE STO OTH SYN/RECONSTI SEM/PRE 71049000 STONE OTH DUST/POWDER NAT SYN 71059000 PRE ST GM GM GM KG

TOTAL GEMS

3.805

3.741

1.70

GEMS-Pakistan Export Markets

(2010-11) US$ million
Sr. No Country 10-11 Export July-June 09-10 Change Value %

1 2 3 4 5 6 7 8 9 10

U.S.AMERICA U.A.E. UNITED KINGDOM HONG KONG GERMANY THAILAND CANADA OTHER COUNTRIES INDIA JAPAN

1.102 0.565 0.393 0.389 0.280 0.238 0.159 0.126 0.109 0.084

1.211 0.524 0.348 0.476 0.329 0.132 0.145 0.090 0.152 0.105

(0.109) 0.041 0.045 (0.087) (0.049) 0.106 0.014 0.036 (0.043) (0.021)

(9.00) 7.82 12.93 (18.28) (14.89) 80.30 9.66 40.00 (28.29) (20.00)

GEMS
Reasons for Insignificant Export of Gems Gems from Pakistan are generally exported as embedded part of the jewellery. Mining of Gemstones in Pakistan is being done through primitive methods and subsequent cutting & polishing of stones is also traditional not matching to international standards. Pakistan also lacks in fashion designing and sophisticated cutting & polishing of stones. Security concerns in areas which host almost entire gemstones potential of Pakistan.

Gems & Jewellery

The facilities and incentives (beside other reasons) provided by TDAP during last 03 years have resulted in the tremendous export of Gems & Jewellery from US$ 48 Million in 2006-07 to US$ 221 Million in 2007-08 and US$ 288 Million in 2008-09. During Fiscal Year (09-10) Gems & Jewellery exports jumped to record figure of US$641.67 Million. However, export of US$ 300 Million is in accordance the existing infrastructure available in the country. The rest i.e. around US$ 341 Million is Bubble Export (due to high prices in international market), bound to evaporate within couple of years. Keeping in view the fact of Bubble Export during Fiscal Year (10-11) Gems & Jewellery export was US$ 407.347 Million. In the current Fiscal Year the export of Gems & Jewellery till July-March FY11-12 is US$587.195 Million as compared to US$ 280.186 Million during the same period in FY10-11 with rise of 100.57%.

Gems & Jewellery

Incentives offered by TDAP (Entrustment Scheme)
The shipment period for export of gold jewellery against imported gold under Entrustment Scheme, has been enhanced from 120 days to 180 days. The period in realization of sale proceed has been extended from 190 to 280 days from the date of shipment. The import of Silver and Platinum has also been allowed under the Entrustment Scheme. Import of Diamond and other Precious Stones is allowed on SelfConsignment Basis under specific procedure of Customs Authority. Import of Gold, Silver, Platinum, Palladium, Diamonds and gemstones under all schemes are exempted from normal import tariffs. The import of raw materials, tools, machinery and equipment used in the manufacturing of Jewellery has been allowed free to custom duties and without payment of advance income tax.

Incentives offered by TDAP (Entrustment Scheme)

Government has allowed jewellery industry as zero rated. In case any exporter of gold jewellery uses duty-paid raw materials procured from the local market, duty drawback shall be admissible according to the standard duty drawback system. Refund of sales tax, if paid, shall be allowed according to the Sales Tax Refund Rules of 2005.

Procedure of valuation and custom has been streamlined in a joint meeting of Customs, ASF and TDAP on 24-10-2009 and in subsequent meetings. This helped in streamlining the unhindered flow of Gems & Jewellery exports by encouraging the traders. Self financing scheme is adopted to facilitate Gems & Jewellery exporters for visiting promising markets for the enhancement of their exports.

Incentives offered by TDAP (Entrustment Scheme)

Gold wastage or manufacturing loss in the production of gold jewellery has been allowed to the exporters as under: Plain gold jewellery 2% of gold content of jewellery by Weight. Studded or embedded gold jewellery 10% of gold content of jewellery by Weight. Export of gold jewellery has been allowed with minimum value addition as under: 4% on gold bangles and chains 6% on other plain jewellery 9% on studded or embedded jewellery.

EXPORT REQUIREMENTS
Membership of one of the recognized Association of Jewelry and Gemstones Registration with Trade Development Authority Of Pakistan(TDAP) NTN certificate National Identification Card Membership certificate of Chamber of Commerce and Industry Membership certificate of association Recommendation letter Sales tax registration number Bank certificate Jewelry Pass Book

Export Procedure - General

Export of gold jewelry shall be allowed by air, parcel post, courier services and by sea, as accompanied or unaccompanied baggage. Export of gold jewelry shall be against advance payment irrevocable L/C firm order or contract, delivery on payment or delivery on acceptance (DP/DA), or consignment sale, as well as on self-consignment basis through authorized representative. Export of gold jewelry shall be made through E procedure of SBP. The sale proceeds shall be appropriated either wholly in foreign exchange through normal banking channels or partly in the form of gold up to one hundred per cent weight of gold content of jewelry exported including wastage, and gemstones, and partly in foreign exchange for value addition.

Special Schemes for export of Gems & Jewelry

Entrustment Scheme:
It provides for export of gold jewelry & articles, against gold supplied as partial advance payment, by the foreign buyer, to the extent of the quantity of gold including wastage used in manufacturing of exported items. The exporter shall supply gold jewelry of contracted quantity of gold content within (180) days from the date of import of gold into Pakistan, in case of failure to export jewelry with 180 days, the exporter will pay livable duties and taxes on imported gold and 5% penalty of livable duty for first month and 10% for subsequent months.

Self Consignment basis:

The exporter will submit an application The import authorization shall be valid for (120) days The jewelry Pass Book, duly authenticated The sale proceeds shall be realized, within 242 days The unsold jewelry or gemstones shall be deposited with the Customs authorities

Display or Sale in international Fairs & Exhibitions:

Exporter shall be allowed to take out gold jewelry and gemstones, for display and sale in international fairs and exhibitions, either as accompanied baggage or through parcel post or courier service, according to the procedures as mentioned in entrustment scheme.

Sales of Jewelry to foreign buyers and overseas Pakistanis:

Foreign national and overseas Pakistanis shall be allowed to take out personally gold jewelry or gemstones up to the limit of US Dollars ten thousand, against foreign currency encashment certificate, with itemized purchase receipts and, if the value exceeds US Dollars ten thousand, the normal export procedure shall be followed.

IMPORTANT ENTITLEMENT OF GOLD, GEMSTONES & OTHER RAW MATERIAL

Import of Gold & Gemstones against export of Jewelry:

In case of exports of gold jewelry made from locally produced gold and gemstones where sale proceeds are realized wholly in foreign exchange, the exporter shall be entitled to replenishment of gold at one hundred per cent of gold content of jewelry exported including wastage and gemstones actually used in the jewelry exported and the exporter shall be entitled to claim import entitlement for the replenishment within one hundred and eighty (180) days from the date of realization of export proceeds.

Advance import of Gold

Exporters may also apply in the form as set out in Annex, E for advance authorization of import of gold and gemstones, before export of jewelry, as per letter of credit or firm export order or contract, subject to deposit, with their bank of cash margin equal to one per cent of the value of gold and gemstones and in this case the procedures under the Entrustment Scheme shall apply.

DIFFERENT NORMS AND STANDRADS:

Duties & Taxes:
Import exempt from normal import tariffs. Raw materials, tools, machinery and equipment under import of gold and gemstones against export of jewelry or import entitlement will free of customs duties and advance income tax. In case an exporter uses duty-paid raw materials procured from the market, duty drawback shall be admissible according to the standard duty drawback system in force. Sales Tax on export of Gold Jewelry and Gemstones will be zero-rated. An exporter can claim refund of Sales Tax paid on raw material inputs. Advance Tax at the rate of .75% shall be charged on export of Gold Jewelry and Gemstones along with 0.25% Export development surcharge

Wastage of Gold:
Gold wastage or manufacturing loss in the production of gold jewelry shall be allowed 2% of plain gold jewelry & 10% on studded and embedded jewelry.

Value Addition:
Export of gold jewelry shall be allowed with minimum value addition as provided in clause (c) of para 8, given below: a) 5% on gold bangles and chains; b) 10% on other plain jewelry; and c) 15% on studded or embedded jewelry.

Purity and Form of Gold:

Import of gold, directly by the exporter or supplied by foreign buyers, shall be in minimum quantity of five hundred grams, in standard bars/slabs/grains form in 995.0, 999.9 fineness.

IMPORT PROCEDURES
1. Arrival of Goods at Customs Port: Appraisal, where the goods are physically verified and customs duty is assessed Appraisal where the actual or final duty is calculated and levied upon the importer.
2. Filing and Examination of Bills of Entry: The customs clearance process starts with the arrival of cargo ship, plane or other carrier of goods in the country on the designated sea, land and air ports. Upon arrival of the goods at the customs port, the port authorities issue the Import General Manifest (IGM) to each shipment. It is a number indicating the serial of the shipment arrived during the year. Upon receipt of the IGM the consignment is further indexed to allow for a systematic reference of all goods received. After issuing this number, the shipment is off loaded and sent back to port warehouse. 3. Assessment of customs duty
Invoice of shipment Packing List Bill of Lading Copy of letter of credit or contract

NORMS & STANDARDS

Duties and Taxes: exempt from normal import tariffs. Exempt from custom duty and advance income tax. Sales Tax on export of Gold Jewelry and Gemstones is zero-rated. claim refund of Sales Tax paid on raw material inputs. Advance Tax at the rate of 0.75% shall be charged on export of Gold Jewelry and Gemstones along with 0.25% Export development surcharge Purity and form: Import of gold, directly by the exporter or supplied by foreign buyers, shall be in minimum quantity of five hundred grams, in standard bars/slabs/grains form in 995.0, 999.9 fineness. A conversion table including twenty-four carats gold into lesser karatage prepared for the bank and Customs.

Suggestion/Action Plan Gems & Jewellery

Development
Survey & Exploration of New Promising areas of Gemstones by Geological Survey of Pakistan. Modern Technology for Safe & Sophisticated Mining & Extraction.

Human Resource Development:

Gems & Gemological Institute of Peshawar. Pakistan Gems & Jewellery Institute of Karachi

Participation in International Exhibitions:

Ambiente (Beauty World), Frankfurt, Germany, 10-14 February, 2012 LifeStyle Pakistan Exhibition, New Dehli, India, 12-15 April, 2012 Tucson Gems & Jewellery Show, Tucson, USA, January, 2013