Gold smuggling incurs loss of Rs 600m to govt
KATHMANDU, Nov 14:
The country suffers a revenue loss of about Rs 600 million annually because of gold smuggling, going by the estimated smuggling of about 1,150 kg of the yellow metal into Nepal during the past fiscal year.
The extent of the loss is calculated on the basis of the government’s gold tariff rate of Rs 5,200 per 10 gram on imports by ‘A’ class commercial banks, with permission from Nepal Rastra Bank.
Out of the 9,000 kg of gold sold in Nepal during fiscal year 2013/14, about 6,050 kg came in through the customs and an estimated 25 percent (1,800 kg) was brought by Nepalis returning from abroad. The remaining amount (1,150 kg) was supplied illegally. The illegal amount is calculated on the basis of the total gold inflow and the legal supply, including the gold brought by returnees.
A Nepali national can bring up to 50 grams of gold as jewelery after staying more than six months in a foreign country, and up to 500 grams on payment of an additional 50 percent tariff over the tariff that commercial banks pay.
Police nabbed 140 kg of smuggled gold last fiscal year alone and experts say the recovered volume is only the tip of the proverbial iceberg. If the gold recovered by police is anything to go by, the Central Development Region is a hotbed for smuggling, accounting for the siezure of 124 kg during the fiscal year.
Nepal’s bullion market is worth about Rs 30 billion. Director General of the Department of Customs, Surya Prasad Acharya, maintained that they could only speak about the imports coming in through formal channels.
Chief of revenue division at the Ministry of Finance, Rajan Khanal, said for his part that tariff is not a problem but tighter security is needed to discourage the illegal trade.
The traders are tempted to smuggle in gold as this is cheaper by Rs 500,000 per kg. However, it results in a huge stockpile of unsold gold in the commercial banks. Traders have not been purchasing gold from the banks, which now have a stockpile of 450 kg in their vaults. Banks are allowed to import 15 kg of gold per day in total as that is the volume of daily consumption.
“We set the tariff rate in a balanced manner, both to discourage smuggling and also discourage huge imports for managing foreign currency reserves,” added Khanal.
Former Commerce Secretary Purushottam Ojha, however, disagrees with Khanal’s approach. “Nepal should have fixed the tariff in such a way that it does not provide any incentive for smugglers,” said Ojha, adding that local traders prefer smuggled gold over the gold imported by banks. He added that the purity of smuggled gold is questionable.
IGP orders monitoring of gold smuggling
Meanwhile, Inspector General of Nepal Police Upendra Kanta Aryal on Friday issued a directive to the departments and units of Nepal Police to maintain strong vigil against the illegal smuggling of gold. The IGP’s fresh directive came after Republica carried a story on Friday headlined ‘12 percent of gold demand met by illegal supply’. Talking to Republica, police spokesperson Madhav Joshi said the IGP has issued the directive to all police units. Joshi said the illegal trading was due to the price differential between illegal gold and legal imports.
Source: Republica
