Deserted by Chinese buyers, the gems market in Kachin State is struggling as prices fall by two thirds

Deserted by Chinese buyers, the gems market in Kachin State is struggling. As prices fall, traders are seeking government permission to reach out to international buyers, sources said.

Demand has fallen after a Chinese government crackdown on traders who bought value-added jade without paying tax, said U Z Lum, chair of the Myanmar Gems and Jewellery Entrepreneurs’ Association in Myitkyina, the capital of Kachin State.

“Chinese buyers have to pay high taxes in China if they buy our value-added products. This has had a huge impact on the jade market,” he said.

Trader U La Wum of Pha Kant, said 80 percent of jade sold at the market is bought by the Chinese and the other 20pc goes to buyers from Myitkyina or Mandalay. “The market is very quiet,” he said.

The market opened last May in an industrial zone on the outskirts of Myitkyina with over 100 shops dealing in amber and jade. Many have had to close as prices fall, with sources claiming the price of jade had dropped by two-thirds.

For example, a grade-D bracelet, previously sold at K15,000 is now going for just K5000.

U ThaungKyi, a shop owner in Myitkyina, said only about 20 of the 100 shops that opened last year are still operating.

“Chinese traders refuse to buy from us. We need international buyers to develop the market, and we’re waiting for the government to agree to this,” he said.

Earlier this year, the government allowed Hpakant traders to sell raw jade at Myitkyina, but limited sales to grade C and D stones. In the past, all sales had to go through Nay Pyi Taw.

The highest-grade A and B stones can now only be sold only at the emporium in Nay Pyi Taw. The association has asked for permission to trade higher-quality jade in Myitkyina, said U Z Lum.

“Now that we’ve got a market here, the association can verify the quality and price,” he said, adding that cheating had taken place before, when traders used to do their dealing in local teashops.

Gems emporiums are held twice a year in Nay Pyi Taw, though prior to 2013 such events used to take place three or four times a year.

Jade exports are supposed to enter China only through border trading zones at Lweje and Kambalti overseen by a team of officials from the state government, the special

intelligence department, customs, internal revenue and the gems association.

However, there are 30 or 40 illegal gates where traders can avoid customs, and which are controlled by local ethnic armed groups.

According to Ministry of Commerce sources, the ministry’s mobile teams raid smuggling routes every two to three months in Kachin and Shan states.

Raw materials are taxed at 15pc in the current 2015-16 fiscal year, while value-added products are taxed at 5pc. The costs of adding value to raw jade include electricity charges that cost K160 a unit in Kachin compared to K50 in Mandalay, as well as the need to hire jewellers from other towns like Mandalay.

“There’s not much profit in value-added products,” said U Z Lum.

The Myitkyina association has been discussing with the Ministry of Mines the possibility of exporting via the Gems Trading System three or four months from now.

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