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Wednesday, March 30, 2016

Tip of iceberg: Only a small portion of smuggled gold is seized; India with high demand remains the major destination

 Shariful Islam and Wasim Bin Habib

More than 1,000kg of gold worth around Tk 450 crore was seized in the last one year by Customs Intelligence and other agencies.
Detectives and investigators suspect the seized gold makes up only five percent of the total gold smuggled into Bangladesh during that period. A small portion fed local demand and the rest went to India, the world's second biggest consumer of gold after China.
Therefore, a guesstimated 20,000kg or 22.04 tonnes of gold worth around Tk 9,000 crore was smuggled out of the country in just one year.
Leaders of Bangladesh Jewellery Association believe around 10,000 tolas or 116kg of gold is smuggled to India via Bangladesh every day.
Gold smuggling through Bangladesh became rampant after India raised import duty on gold from 2 percent to 10 percent in three phases from 2012, resulting in a sharp decrease in import.
Currently in Bangladesh, a traveller can bring up to 200gm of gold from abroad paying a tax of Tk 3,000 per tola (11.66gm) under baggage rules. But a traveller can bring gold up to 100gm without any tax and duty.
The World Gold Council estimates that a staggering 150-200 tonnes of gold is smuggled to India each year.
In Bangladesh, there was no import of gold through LC (letter of credit) in the last three decades, said Joint Commissioner of Customs Kazi Muhammad Ziauddin.
The current government policy allows import of gold and silver, subject to permission from Bangladesh Bank.
A central bank official said, “So far I can recall none ever came to us for permission to import gold as the internal demand is met internally.”
Wishing anonymity, he said the gold sold through auction by the Bangladesh Bank is one of the ways of meeting internal demand.
Another BB official said local demand is met also by smuggled gold.
Syndicates use Bangladesh to avoid tight security checks at Indian airports. Once they used to smuggle gold to India through the sea. But security has been beefed up on the sea routes since the Mumbai terror attack in 2009, said intelligence officials dealing with the gold smuggling cases.
In contrast, security at Bangladesh airports is quite relaxed. Smuggling syndicates easily bring in the metal through the airports with the help of a section of unscrupulous officials of Biman, Caab and intelligence agencies deployed at the airports. They also manage persons in the administration to ensure safe passage of gold to India, the officials added.
According to the detectives, smugglers now make a profit of around Tk 2.5 to 3 lakh on every kg gold sold in India after meeting the purchase cost in Dubai, Singapore or Malaysia and all other expenses like carrying cost and bribes to the people at the airports and administration and agent charges.
"Gold is also a means of payment for drugs, arms and cattle," said one of officials. Gold is also used for illegal money transfer to evade tax through over/under invoicing.
In many cases, prices of goods are shown less than the actual prices on letter of credit (LC) to evade tax at the ports. Buyers, however, have to pay a bigger amount to the seller and they use gold to pay the additional amount, the investigators said.
Talking to different agencies and jewellery traders, The Daily Star gathered that the domestic demand for gold in Bangladesh is about 1.9 tonnes or 1,725kg per month.
Of the local demand, around 1.15 tonnes is met through recycling, said Enamul Haque Khan, general secretary of Bangladesh Jewellery Association.
Some smuggled gold might have been used for local consumption, but he had no idea about the amount, he added.
There are around 4,000 jewellery shops registered with the association. Besides, several thousand other small jewellery shops also do business in different localities, Enamul said.
According to the Customs Department at Hazrat Shahjalal International Airport, which handles 90 percent of the total air travellers, about 319kg of gold was carried by expatriates from Singapore, Malaysia, Dubai and other Middle Eastern countries legally per month in one year till June 2014.

As the government increased the customs duty in June, this supply came down to 91kg a month. The customs officials and investigators believe the shortfall is now being met by the smuggled gold.

Source:  The Daily Star, 28 February 2015

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