The gems and jewellery sector can play a vital role in economy of Pakistan, contributing immensely in earning of foreign exchange and providing employment opportunities. Pakistan has enormous wealth of expensive gems such as ruby, emerald, tourmaline, garnet, topaz, peridot, aquamarine, spinel, pargasite, diopside, moonstone, pink topaz, sapphire, zircon, feldspar, agate, serpentine jade, epidote, pink beryl (morganite), purple beryl, sphene, zoisite, lapis lazuli, turquoise, and kunzite etc.
Our industry has huge potential for value addition and profitability but due to lack of apprehension, this industry is far below our regional competitors, who are engaged in the mining, cutting/polishing and trading of gemstones.
In Pakistan, we have not been able to exploit the full potential of this sector due to lack of appropriate skills, regulatory bottlenecks, inadequate marketing and branding with poor channel of precious and semi-precious gemstones to domestic and international markets. The technological limitation is also responsible for low value-addition, hampering the efforts of new investment to make any significant progress in this field.
Despite the fact that our exports are insignificant compared to that of the potential, yet it is worth mentioning that our export of gems and jewellery rose from US $1.5 million in 2001 to US $289 million in 2009.
The structure of this industry is global in nature, like; the source of the raw material are Africa, Canada, Russia and Australia, whereas India, China, Turkey, Holland, Belgium and Italy are the countries involved in gems, jewellery manufacturing and processing and the retail markets are in US, Europe, Far East, Middle East and Asia etc. Mostly gems found in Northern Areas, Balochistan and Khyber-Pakhtunkhwa, have a vast market in the US, Germany, Hong Kong, Thailand, Latin America, South Asian and European countries.
Pakistan's gems and jewellery sector has huge potential and our country can become regional leader by adopting modern techniques and methodologies of value-addition as it is home to a number of varieties of expensive gems. In view of the potentially huge world market for gems and jewellery and the fact that Pakistan has vast natural reserves of precious and semi-precious gemstones, cheap labour and rich tradition of craftsmanship in jewellery manufacturing, the government gave this sector the status of industry. The Ministry of Industries and Production has announced a positive step in ensuring that the development, promotion and marketing of this sector is undertaken professionally to achieve the desired results, but the implementation of policy decision for is pending.
The 16.7 million of domestic population represent huge market size of economy but due to untapped potentials bulk of jewellery is imported or smuggled from India and China, which is an obstacle in the protection of domestic industry. The efforts of Pakistan Gems and Jewellery Development Company for the reduction of duty on natural pearls and-precious/semi precious stones and exemption of customs duty and sales tax on import of diamonds, Pearls and precious/semi-precious gems are appreciable steps for the development of the Industry, but due to lack of interest of the government and policy-makers, our industry is far behind our regional partners. Our regional partners achieved significant potential in this sector with the advancement of technology, skills and other factors.
In gem and jewellery sector, India has a monopoly in international market. Pakistan can break the monopoly by upgrading its industry and increasing its share in world market. Our gems and stones are superior in quality than our regional partner, but due to lack of technology and high wastage in production process, we are producing inferior quality output of this sector. One of the significant reasons of our low exports is the uncompetitive prices of jewellery. This exists due to high labour cost and high wastage, as compared to our neighbouring countries. The other impediment in development of this industry is the lack of design schools and qualified designers. Adoption of latest designing and manufacturing techniques, establishment of related institutions with foreign or local experts would help the production of better quality gems and jewellery in the local market as well as in the foreign, as without a stable domestic market exports will not pick-up.
Due to infant stage of industry, a large quantity of Pakistan's precious stones is smuggled in raw form to neighbouring countries, as there is no proper system of cutting and polishing of stones in Pakistan. After cutting and polishing, the stones are sold by neighbouring countries in global markets and some quantities are also brought back into Pakistan, which raises our cost of doing business and make our product uncompetitive in global market. So, there is a dire need of the country to train the jewellers in cutting and polishing segment for the proper development of country and bring latest technology for production of jewellery by modern machines, which can maximise productivity and minimise wastage. In Pakistan, the wastage in hand casting is as high as 15 percent, which can be reduced to around 5 per cent by using modern machines.
Pakistan has got more than 1.67 billion tonnes of copper-gold reserves (value US$ in trillion) in the area of Rekodiq and Saindak in Balochistan. The Saindak Copper Gold Project has capacity to produce 15,810 tonnes of blister copper annually with gold content of 1.47 tonnes. These projects are now useless due to an extremely uneconomical gold recovery cost, but can be made feasible with the help of international investment. Pakistan, based on its potential in mineral wealth, can become a great hub of the gemstones industry in Asia, provided it takes a few essential steps that can enhance the exploration of resources and growth of business.
Pakistan can establish its gems and jewellery sector in four categories such as polished gems, gem stones, jewellery and synthetic stones. These could be produced through chemical and physical process in laboratory). Higher level of value-addition is possible with the studded jewellery which contains precious and semi-precious stones. At this stage, we should invite the foreign investors to come forward with latest technology for the development of industry, quality and improvement of labour productivity by providing technical assistance to local manufacturers for the benefit of the country and the economy as per the international standards. Further, it will help to boost the quality of craftsmanship of jewellery in terms of design to reflect the latest fashion trends based on international expectations and demand. The gems and jewellery industry is looking towards building the brand equity of the Pakistan products such as gold jewellery and cut and polished diamonds. Pakistani gems and jewellery industry needs rapid strides in design, professionally trained entrepreneurs and technology driven designers. We need technological solution just for production control, supply chain and inventory management in the jewellery industry. The skill enhancement through training would lead to greater competitiveness in Pakistan. With satellite beaming advertisements of jewellery, the buyers in Pakistan will inevitably start demanding them which will be a setback to the local jewellery industry.
The industry of our regional competitors is mainly small-to-large units based, and it is necessary for us to develop on the pattern of regional competitors. According to Gem & Jewellery Export Promotion Council (GJEPC), India's gem and jewellery exports posted a modest growth of 1.45 percent at $21.1 billion in 2009, primarily driven by gold jewellery exports, including medallions, diamonds and ornaments Whereas China itself is emerging as a big exporter of plain gold and artificial jewellery with export earnings estimated to have reached $12 billion in 2009, demand for jewellery in Chinese markets is outweighing local supplies. The Indian gems and jewellery industry is competitive in the world market due to its low cost of production and availability of skilled labour. India has set up more than 3,000 offices world-wide for promotion and marketing of Indian diamonds.
Jewellery is traditionally a luxury item of consumption, and demand for jewellery is highly elastictied to income. In China and the UAE, Taiwan, Korea and other countries per capita disposable income raises the demand of jewellery in recent times. The appeal for jewellery is the highest among younger consumer sections. The youngest is also fashion-conscious, and the rate of design obsolescence is fast, thereby helping innovation and sales. The demand of jewellery is high especially in the season of Muslim occasions, the end of December for Christian due to Christmas and in ceremonies of marriages etc. In many countries like India, Thailand, Korea and China the demand after the seasonal monsoon begins with the start of the festival season and continues until May next year.
Pakistan is the Eight biggest consumer of gold in the world and annually imports 127 tons of gold, but unfortunately due to lack of consumer satisfaction, Pakistani jewellery industry suffers from unfair competition by those who offer low-carat gold and therefore sell at a lower price. In order to improve the quality of jewellery products and complete quality assessment, we should use the hallmarking. A number of successful jewellery industries in the world use hallmarking both as a marketing tool and to ensure consumer confidence. Hallmarking will help Pakistan small and medium sized enterprises to reposition themselves on a more competitive footing in the domestic and global markets.
Despite the fact that Pakistan has rich mineral resources, eighty percent diamond market share is owned by India, but with a little effort this proposition could be changed in Pakistan's favour. The global market for gems and jewellery today is around US $85 billion, having registered an average compounded annual growth rate (CAGR) of 5-10 percent in the last decade. Globally, Italy is the world's largest producer of jewellery produces estimated US $6.5 billion worth of jewellery strength lies in plain jewellery followed by China/Hong Kong, Thailand and the USA. Globally, the gems and jewellery industry, is facing key trends such as increasing competition among top producing countries.
The government of Pakistan should realise the potential of gems and jewellery sector of economy by providing the facilities for raising the export volume from mine to market and to enhance its competitiveness internationally by facilitation, technology upgradation and skill development. We can make our jewellery exports to new heights by penetrating global markets first by exporting fine quality of plain jewellery and then by making our studded-jewellery popular among global consumers. Increasing competition in the industry will indicate that firms work towards increasing their productivity and innovation, improving overall capability levels within the industry. Low cost skilled labour coupled with advanced technical capabilities provides the right platform for the Pakistan gems and jewellery sector to grow and become globally competitive.
Pakistan can offer the twin advantages of skilled labour and low cost in the area of gemstone processing, as compared to other gems processing countries. In addition, the world-wide distribution network of industry can help in establishment of industry. A near dominance in diamonds and coloured stones, manufacturing excellence, forward looking entrepreneurs, liberalised government policies and an extensive international marketing network has helped Pakistan establish itself as one of the leading jewellery centres in the world.
The gems and jewellery industry should make rapid strides in design, powered by a new generation of young, professionally trained, technology driven designers and jewellery manufacturing facilities should be equipped with the latest advanced design systems. Technology solutions are also available for production control, supply chain and inventory management in the jewellery industry. The gems and jewellery industry in Pakistan can be a good blend of modern manufacturing and design techniques with traditional skills.
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