Thailand 'linked' in gold smuggling to India

In its online article “Bullion backwash”, the newsmagazine began with a man saying how he bought gold bullion from Thailand’s Chinatown, Yaowarat, and carried it with him to India, where he could fetch a higher price.

It is the latest article by foreign news agencies that involves Thailand. In the past few months, Thai authorities have been keeping a close eye on gold imports. The government does not impose a duty on gold imports, and it also waives the 7-per-cent value-added tax for registered jewellery manufacturers.

Thailand’s gold imports in the first seven months of this year were worth US$10.86 billion (Bt347 billion), or 8.28 per cent of total import value. This threatens the country’s current account and there is concern that some importers use gold to speculate on the dollar/baht exchange rate. Gold has become cheaper in Thailand because of the wobbling economy and baht.

Yesterday in Thailand, a piece of gold bullion weighing 15 grams, or 1 baht, cost Bt19,000. Year to date, the local gold price was Bt20,309, while the average was Bt24,126 last year.

The article said an Indian man bought bullion in Yaowarat for $15,000 that could be sold in Mumbai for $16,500.

This year the Indian government imposed quotas and increased taxes on gold imports, but it takes more than that to limit Indians’ love of gold. Although the country’s statisticians report that Indians officially buy a lot less of the precious metal – 148.2 tonnes from July to September, a third less than in the same period last year – there has been a surge in gold smuggling.

“Customs officials at airports in India, Nepal and Bangladesh are reporting a spike in seizures of gold originating from places such as Abu Dhabi, Bahrain and Dubai,” the article said. 

“What happens along India’s 15,000-kilometre land border and 7,500km coastline is anyone’s guess. But the effects of India’s attempts to curb gold imports are most widely felt in Thailand.” 

It said that because of import controls in India, more physical gold had made its way to Thailand. In the most recent quarter, demand from Thai consumers surged 125 per cent from the same quarter last year, to nearly 36 tonnes. 

The World Gold Council said the increase was “in no small part due to Thailand being used as a route to channel gold into other markets, notably India and Vietnam”.