MYANMAR’S gold export has paused when the international remittance for gold purchase has changed from Telegraph Transfer (TT) to Letter of Credit (LC), said Chairman U Myo Myint of Yangon Gold Entrepreneurs Association (YGEA).
“As per the notification released by the Ministry of Commerce, starting from April, payment method was changed to LC. As a result of this, payment can take about two months, cost banking service changes by two sides, and increase the charges for security matter in transportation. Meanwhile, gold trading in the international market has also come to a stop due to volatile prices,” he continued.
Earlier, Myanmar exported gold to Japan and the Republic of Korea by TT payment system, which is prompt payment or transfers through the bank.
Later, the Trade Department no longer approve the TT. They grant a licence for trading with the LC system.
“We used the TT system for direct deposit through banks or immediate payment. Once the transfer is received, the goods are shipped. With the LC system, we have to open LC at the bank and so do for the buyer side at his/her bank. Additionally, they have to be shipped by linking with the insurance company. It costs around US$500 for 1,000 worth items, due to the banking service for the delayed payment and higher transportation charges. So, the buyers are not interested in buying and the export is completely halted,” YGEA Chair explained.
Following the suspension of gold export, the rate of domestic gold prices is about K100,000 per tical (0.578 ounces, or 0.016 kilograms) lower than international prices according to the YGEA.
“The large gap between domestic gold and global gold prices is the main reason for export suspension. We cannot sell or buy gold according to international prices. The gold export is stopped during the COVID-19 pandemic,” he said.
More than 10,000 local goldsmiths are unemployed owing to a trading halt with the external market, he added.
This being so, trading with the TT system is required to make the domestic gold market recover.
Having said that, the YGEA have already submitted a request for the resumption of the TT payment system to the Ministry of Commerce.
Gold and other jewellery are primarily purchased by Japan and ROK, and other tourists also buy them, the YGEA stated.
Myanmar gave green light to gold exports and imports in January 2018, with the aims to eradicate illegal trade, earn revenue for the country and maintain the market’s stability .
By Nyein Nyein (Translated by Ei Myat Mon)