Here is what Mr Vichai Assarasakorn of the Thai Gem and Jewellery Traders Association has to say about the state of the industry: "Currently, we do not have our own raw materials, making us reliant solely on imports. Without steady and sustainable raw material supplies, over one million skilled craftsmen will be hard hit in the future.The association sees it as necessary to push forward all efforts to convince the new government to waive existing value-added tax (VAT) on raw-material imports to streamline and promote the free flow of trade in raw materials such as precious stones, diamonds and processed precious stones to the Thai market.
A zero-rate VAT would draw more raw material suppliers to Thailand, improving the competitive edge of Thai producers and providing greater access to raw materials. Thailand has more than 10,000 gem and jewellery businesses but 90% of them are small and medium-sized enterprises. In addition to a raw material shortage, local firms face rising competition, notably in the US and Japan, particularly in the low-end segment, from Chinese and Indian producers. Gems and jewelry are among Thailand's key exports, with 20% growth this year to 170 billion baht. In dollar terms, the figure is expected to grow 30% to about $4.8 billion.’
He cites the success of Dubai, which has become a global gold trading centre due to tax waivers. Last year Dubai's gold trade rose 37% year-on-year to $14.75 billion.
I think the Thai gem and jewelry sector will have to innovate with new concepts and attitudes to compete in the emerging markets.
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