‘Abolish taxes on imports to encourage growth’

Officials at leading gem institute call for tax cuts, incentives for industry to reach its potential.

PESHAWAR: Industry leaders asked the government to abolish income and sales taxes on the import of gemstones from Afghanistan to boost the industry locally and encourage more investment in this sector.

Executive Committee Gems and Gemological Institute of Pakistan (GGIP) Chairman Zia-ul-Haq Sarhadi said gemstones were being exported to India, Singapore and other countries due to favourable policies and wider market access, whereas in Pakistan, the government has imposed a 22 per cent tax on imports, making trade unattractive and costly for businessmen in the sector.

He suggested that the Khyber-Pakhtunkhwa Chamber of Commerce and Industries (KPCCI) be given authority to regulate policies of the gemstone industry as it could be a great source
of revenue generation if provided with a suitable environment.

GGIP should be shifted to a separate building where latest equipment and machinery should be provided, he maintained, while noting that exporters do not show the real value of stones and deprive the government of revenue.

Noting that GGIP is the only educational and research institute in the country providing training in gemmology, he said over 1,800 students, including 60 women, have been trained in the institute and are now running their own businesses.

Sarhadi said annual revenue generation from the gemstone sector touched $6 million (Rs509.76 million) mark in Pakistan, but foreign exchange was on the decline due to security issues and imposition of new taxes on the industry.

He said the industry could be a good source of earning and self-employment and urged the Trade Development Authority of Pakistan to provide entrepreneurial incentives to investors.

He also noted that over 90 per cent jewellery available in the market uses synthetic stones instead of gemstones due to their prices.

GGIP Instructor Abdul Malik said that most mining was done through blasting and ban on the activity in Pakistan and Afghanistan have created serious hurdles for the sector. He said gemstones worth Rs200 to 250 million (US$2.3-2.9 million) were exported annually, with Thailand, Singapore, India, Germany, Italy and the USA the biggest markets for the gemstones industry.

Malik said that Pakistan is blessed with vast natural reserves of precious and semi-precious gemstones, including ruby, emerald, tourmaline, garnet, topaz, peridot, aquamarine, spinel, pargasite, diopside, moonstone, serpentine jade, epidote, pink beryl (morganite), purple beryl, sphene, zoisite, lapis lazuli, turquoise, kunzite and almost all known varieties of quartz.

There is great opportunity to exploit natural reserves in order to create a substantial international market for Pakistani gems and jewellery, added Malik.

Published in The Express Tribune, February 10^th, 2011.