The quota problem continues to grow in jewelry, which is the leading sector of Turkish exports with an average price per kilogram of 5 thousand dollars. Following the quota imposed on gold, companies that had difficulty in accessing gold could not meet the demand due to insufficient supply.
Following the quota imposed on gold imports, the average difference of 3 thousand dollars per kilogram negatively affected the supply on the one hand and pushed domestic companies to seek production abroad for competition on the other. Some of the companies, which had difficulty in competition due to the average difference of 3 thousand dollars per kilogram, decided to move their production to Dubai.
Burak Yakın, President of Jewelry Exporters Association (MİB), pointed out that the sector could not withstand the competitive conditions and said, “Our exporters started to make preparations to invest in factories in other countries.”
On August 24, 2023, we detailed the problems in the sector in our news article ‘Jewelry companies are heading abroad’. Sector representatives state that after this date, Turkish companies’ interest in going abroad has increased.
MİB President Yakin, who evaluated the jewelry sector for the press members, also drew attention to the issue and said, “Our exporters started to prepare for factory investments in other countries because they could not bear the differences in gold prices. Foreign investors who have invested in our country in recent years have already started to go to different countries, especially Dubai and Italy.”
Quotas can’t stop the gold trade
Stating that the supply has become unable to meet the demand due to the recent introduction of quotas on gold imports, Yakin continued as follows: “While our competitors pay 65 thousand dollars for a kilogram of gold, we have to pay 68 thousand dollars. This includes the domestic market. This paves the way for smuggling. We cannot put the sector in a difficult situation and allow opportunists to make money here. We go to Ankara, and thanks to them, our ministers are very interested in the issue. However, in the end, it would be very beneficial for our country if bureaucrats talk to us before taking a regulation to our ministers for approval. No one has been able to stop the gold trade throughout history, so quotas won’t stop it either. We cannot reduce the current account deficit with gold and energy. The current account deficit seems to have decreased because gold is not officially imported. We do not include the gold smuggled into our country and the foreign currency paid for it in the equation. Since these are not in the equation, they are not reflected in the figures.”
Those who put gold in their suitcases end up in Turkey!
Emphasizing that gold is flowing across the borders, Yakin said, “Those who put gold in their cars and suitcases, who put chains around their wives’ necks and gold belts around their waists, end up in Turkey. There is no such money! They buy gold in Dubai for 700 dollars cheaper than the world prices and sell it in Turkey with a profit of 3 thousand dollars. What triggers the differences the most is the interest given by the banks. It is normal that there is a demand for gold with these interest rates. Since gold is a safe harbor, people also turn to gold. The gold that comes to us for export does not go under the pillow. If it did, either this country would be very rich or it would not be able to import so much.”
Stating that they foresee that the dollar exchange rate will remain between TRY 40-45 at the end of the year, Yakin said that they estimate that the gram will be somewhere between TRY 2,750 and TRY 2,942. Stating that the ounce is constantly appreciating, Yakın stated that they expect the ounce to be USD 5,000 dollars one day.
Quotas should go to the ones with capacity
MİB President Burak Yakın mentioned that there is a problem with capacities within the scope of the Inward Processing Regime and said: “We do not know how capacities are determined by whom. But a company with a single employee is allowed 100 kilograms of gold. We do not know who and how. When issuing a capacity report, sector ambassadors should be asked. Banks and Gold Exchange members should import gold and sell it to exporters and producers at world market prices. Here, we know who is an exporter and who is not. They should not be content with asking us. They should ask for the documents of how long this company has been in existence, how many employees it has, what is its address, has it ever exported, has it participated in fairs? Even when obtaining a Schengen visa, a lot of paperwork is required, and quotas are distributed to those who do not have capacity, while companies with capacity cannot get them. I am sure that our Ministry of Trade will take the necessary action against those responsible for this issue.”
The jewelry sector increased its share of global exports to 8 percent
Informing that the Turkish jewelry sector closed the year 2023 with an export of USD 7.7 billion with an increase of more than 30 percent, Yakin emphasized that the share of the sector in the world has also increased. Stating that the share increased from 5.69 percent to 7.96 percent with an increase of 40 percent, Yakin said, “This increasing momentum shows the global competitiveness of the jewelry industry and the high value-added exports it promises. If the sector is paved the way, we can export USD 10 billion for 2024.”