Gold hand carry to be on hold

KATHMANDU: To avoid the flight of money, Nepal Rastra Bank has stopped hand carry process of importing gold in the country. After India’s hike in customs duty to IRs 300 per 10 gram of gold, importers here had urged the government to increase customs duty on import of gold in Nepal too. Price of gold in the Indian market is Rs 350 more than in Nepal, said Nepal Gold and Silver Dealers’ Association (NEGOSIDA) president Tej Ratna Shakya. He said that until NRB fixes customs duty on gold import the hand carry process will be on hold.

“To balance the economy of the country, the government must raise customs duty. It will definitely send the price high but it will also create balanced transaction here and avoid dollar deficit in the country,” Shakya said. Last year, customs duty charged by the Indian government was IRs 100 which further increased to IRs 200 in July, 2009.

Due to excessive gold import in Nepal, the government set a ban on gold import to avoid dollar deficit. Ten tonnes of gold got imported during five months of the present fiscal year — mid-July to mid-December. According to NEGOSIDA, earlier it used to be around six tonnes annually but it has now increased to 10 tonnes in just five months valued at Rs 25 billion.

To discourage investment in unproductive sectors, NRB has begun controlling import of gold into Nepal. People are importing gold worth over Rs 35 billion in a year. Last year, the total gold import in Nepal was worth Rs 35 billion.

As per NRB data, gold worth around Rs 60 billion is likely to be imported this year. Nepali financial institutions imported gold worth Rs 15 billion in the first quarter of the fiscal year 2009-10. NRB is seriously working to resolve the liquidity crunch caused by real estate, remittance and investment in other non-productive sectors this year.

According to Shakya, till date 700 kilos of gold have been imported by hand carry and the per day gold demand is about 12 kilos. On March 2, gold opened at Rs 27,265 per 10 gram in the first half of the day and Rs 27,520 per 10 gram in the second half of the day.