Myanma gems sector
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The document summarizes Myanmar's gems sector, including its governance by Myanma Gems Enterprise. It outlines the sector's contributions to revenues and job opportunities in Myanmar. It also discusses Myanmar's various gemstones, the licensing system for gemstone mining, taxation policies, and finished gemstone products. The document notes challenges such as illegal gemstone production and environmental impacts that Myanmar aims to address through its national gemstone policy and participation in the EITI initiative for transparency in extractive industries.
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Myanma gems sector
- 1. The Republic of the Union of Myanmar Ministry of Natural Resources and Environmental Conservation Myanma Gems Enterprise MYANMA GEMS SECTOR November 28th, 2019 THET KHAING(General Manager)
- 2. Myanmar Country and Myanma Gemstones Managing Gemstones Industry Govern Gemstones Industry Gemstones Industry Regulator
- 3. • Myanmar and Gemstones • Revenues and Jobs Creations • Myanmar Gems Enterprise • Finished Products • Emporiums • Making Gemstones Policy • EITI • Challenges • Myanma Gemstones Law and Rules • Types of Gems Mining • Licensing Administration • Taxation
- 4. Rich Natural Resources Ethnic armed groups Myanmar Strategic Geographic Features
- 5. M I N I M A 5 Burma ruby Myanmar Amber (Burmite) Myanmar’s ‘Imperial Jade’ Others Myanma Gemstones
- 6. Revenues and Job Opportunities ❑ Revenues ❑ An important key to development ❑ Enhance annually national income ❑ Fee ,Taxes and Share ❑ Job Opportunities ❑ Miners and Traders ❑ Brokers and Retailers ❑ Workers ❑ Migrant Miners
- 7. Myanmar Gems Enterprise ❑ Organisational Structure ❑ Staffs and Personal Development
- 8. ❑ Designation of gemstone blocks, ❑ Permitting and licensing, ❑ Monitoring and Controlling on Mining, ❑ Collection of the tax Fee, ❑ Holding of the gems emporium, Functions of Myanma Gems Enterprise
- 9. Objectives ❑ To develop and develop a percentage of the jewelry and jewelry market in the country with regard to the gems coming out of Myanmar; ❑ To allow the licensee to operate and trade in gemstones in accordance with the market economy system; ❑ To establish free and fair trade in gems and jewelery at all times. ❑ Gems are banned from production in the country and illegally exported. Prevent cracking down of sales; ❑ To maintain and maintain research and development of the gem industry. ❑ To prevent environmental conservation due to gem mining;
- 10. Vision To emerge responsible gems industries that will support the long-term liability for sustainable development of the interest of the state and national people. Mission To change the usage of management methods with transparency, responsibility and accountability.
- 12. For Jades Mining ❖ Lonkhin-Pharkant, ❖ Khamtee gemstone tract, ❖ Mawlu-Mawhan(Mohnyin), Gems Tracts ForGems Mining ❖ Mogok gemstone tract , ❖ Momshugemstome tract,
- 13. • Medium Scale ➢ inside Gems Tract ➢ 5 Acres, 5 years, ➢ Managed by the Union Government Types of Gems Mining
- 14. ❑ types of Licenses ❑ Production License ❑ Tendering System ❑ Price and Performances Licensing Administration
- 15. Tax and Fee ❖ Production Tax (1) Diamond ,Rubies, Sapphire, jade 10% (2) Other 5% ❖ Royalty (1) Rough ✓ Jade 11% ✓ Gems 9% (2) Finished, Jewelery 5% ❖ Service Fees (1) Rough 3% (2) Finished, Jewelery 1% ❖ Commerical Tax 5% ❖ Share(Still enacting) Government Owner 15% 85%
- 16. • Myanma finished gems industry was not grown in domestic • Why increased and many reasons, • Chinese jade carving masters, • poor quality instruments and equipment • Traditional family-run businesses • Technology, modern equipments and increasing skills levels, • Foreign investment, • To do things , • Foreign investment will be encouraged. • skills and technology transfer will be developed. • International-quality laboratories and training centers will be established. Finished Products
- 17. Emporuim ❑ Who Attending ❖ Each merchant was invited by the Emporium Central Committee to attend Emporium with invitation card. ❖ The merchants were invited via the foreign jade association on behalf of Emporium Central Committee and procured the invitation card from the respective embassies. ❑ Emporium Entrance Card ❖ Submit Application form with Clear photo Copy of Passport and Two Color passport photos, ❖ Pay fee entrance US$100 and deposit , ❖ Submit deposit advance payments,
- 18. • Export, official ways, • Emporium; any items including raw gemstones • Gems Markets/ One Stop Service; Only ‘finished’ stones and jewelleries , • Emporiums since 1964. • Three international emporiums, one of each international and local Gems Emporium, • Tendering system. • Central Gemstone Supervisory Committee, • Lasts about 2 weeks, 3 days for viewing ,9 days for tendering, • Euros Currency Gems Emporium
- 19. • The persons who were invited attend Emporium, • by the Emporium Central Committee with invitation card and • by the foreign gems association on behalf of Central Committee, • To hold Emporium Entrance Card, • Submit Application form with Clear photo Copy of Passport and Two Color passport photos, • Pay US$100 as entrance fee and • Submit deposit advance payments, Gems Emporium
- 20. Myanma Gemstone Policy Background • US government support technical assistances, • Gemstone Supporting Committee, • Mandate to develop an inclusive and comprehensive national gemstone policy, Policy Development Process Outcomes from 2-day multi-stakeholder consultation workshops, Consideration of other relevant national policies, laws, initiatives and reform activities and international good practices, Collecting public consultations and recommendations,
- 21. Myanma Gemstone Policy Policy Structure • Five policy pillars, • Permitting, Exploration and Production • Fiscal Regime and Revenue Management • Environmental and Social Impact Management • Value Addition, Beneficiation and Markets • Institutional Governance Arrangements • 37 Policy statements statements, official guideline for the industry, cover and preserve,
- 22. EITI and Gemstones Sector • MEITI • In July 2014, became an EITI candidate country. • EITI process is overseen and implemented by a multi-stakeholder group (MSG) • in December 2015, produced first EITI report, • In March 2018, produced second and third EITI reports,
- 23. EITI and Gemstones Sector • Conclusions and Recommendations • Existing arrangement does not meet international best practices, for governing the State-Owned Enterprises. • Human resources capacity is also an issue for MGE, • Limited number of staff at MGE, • Reviews and strengthens the valuation process of gemstones, • Encouraging gemstone mines to begin adopting international standards for responsible mining, • Exploring the future potential of establishing a mine-to-market traceability system,
- 24. Challenges to Gems Sector • To control illegal jade production, • To eliminate migrants miners, • To conserve environmental impact because of Jade production, • To resolve the conflicts of land ownership caused by the gems blocks defined. • To develop the good governance for Myanma gemstones sector.
- 25. 'Thank you'
Editor's Notes
- Hello everyone. Thanks for I am being here. It is beautiful day for me as on behalf of Myanmar Gems Enterprise I have a chance to discuss with you. My name is Thet Khaing, and I am General Manage at Myanmar Gems Enterprise. I am assigned as an in charge of department of administration, licensing, emporium and budgeting. But I am now responsible for controlling and managing in all sectors at Myanmar Gems Enterprise. My presentation topic name is Myanma Gems Sector This is different to the name in your schedule. In it Law, policy and emporium. I want to share a little knowledge about Myanma Gems Sector ,So I change my topic name and I will discuss about —- including —-
- Today, I am going to give presentation about Myanmar Gems Sector. My presentation is divided into 4 parts. First…,second ….., third….. ,finally At the end of the presentation, I hope you will know something about how important Myanmar Gems Sector.
- My presentation cover these subtopics.
- Myanmar is the second largest country in southeast Asia, after Indonesia. Myanmar has long boundaries with its five neighbors: Bangladesh, India, China, Laos and Thailand. Myanmar is bordered by Bangladesh and India to its northwest, China to its northeast, Laos and Thailand to its east and southeast, and the Andaman Sea and the Bay of Bengal to its south and southwest. Myanmar has been a member of the Association of Southeast Asian Nations (ASEAN) since 1997. Myanmar’s geographic location on the world map place it in a very strategic position. five neighbouring countries, including the two most populous countries in the world on the south and south-west by the Bay of Bengal that provides easy access to the world’s major shipping lanes. Myanmar could become the axis of the hub for trades and transportations in the region. Powerful nations want to control the trade with Burma, for their advantage. In Myanmar over ethnic armed groups according to EAO said. Mostly Mineral resource can be produced in their insurgent area.
- Myanmar has plenty of natural resources. In the early 1960s, Myanmar was the richest country in Asia with wealthy natural resources, It is one of the world’s major gemstones mining country. It can produce ruby, Sapphire, Amber, Jade and another precious and semi precious stones. Burma ruby from Mogok is very well-known gemstones all over the world. Mogok, Also know as land of Ruby has best natural gemstone including pigeon blood ruby with sapphire, spinel, semi precious stone and especially rare stone. Myanmar is the world’s main commercial source of jade and it is commonly estimated that the majority of the world’s jade is now mined in Myanmar. Myanmar’s ‘Imperial Jade’ is the most valuable. Myanmar Amber also knows as Burmite.
- Jade and gemstones mined in Myanmar account for billions of dollars of the country’s annual GDP. An important key to development. Myanma Gemstones sector enhance annually national income. Since 1964 our ministry supervise Myanma Gems Emporium in selling, Gems and Jade. Gems industry Revenue come from tax and fee. Gems Block fee, Royalty ,commercial tax,service fee and Sale of Government’s Share. In Myanmar Gemstones industry can create the number of job opportunities. Such as Workers from Gems and jade companies, jewelry shops, finished product factories and miners,traders retailers, brokers and migrant miners. total amount may be 1 million it is one percentage of myanma population.
- The key player in Myanmar’s gemstone sector is Myanmar Gems Enterprise (MGE). Myanmar Gems Enterprise (MGE), one of the leading state-owned enterprises. is responsible for management and oversight of the sector. Myanmar Gem Enterprise, which is under the Ministry of Natural Resources and Environmental Conservation. MGE is organized by head office and local department located at mining areas,two Gems museums. Over 600 staffs are being assigned at MGE. I am one of them. The number of staffs is not enough and lack of technical sufficient capacity and skills are insufficient that can’t be able to perform our duties effectively. The objectives of this Law are as follows: (a) to establish and develop a hundred percent gemstone and jewellery market within the country in respect of gemstone produced in Myanmar (b) to permit companies and co-operative societies to operate freely production and marketing of gemstone in accordance with the market oriented economic system; (c) to open and maintain gem markets in order to sell gemstone and jewelries freely at all times; (d) to eradicate illegal production of gemstone within the country and to prevent and suppress taking out unlawfully and sale of gemstone abroad.
- Myanmar is unique country. In Myanmar, unlike other gemstone producing countries, the gemstone sector is separated out from the mining sector, both institutionally and legislatively. Furthermore, there is different thing to other countries is defined Gems Tracts. Since 1995, Myanmar has had a separate Gemstone Law in place, supported by a set of rules and regulations, also developed in 1995. This law was amended twice, in 2003 and then in early 2016. However in 2016 the second amendment was never applied, 2016 rules and regulations were not developed This year January, a new law was developed. The existing law was released in 2019 January.Now we are preparing rules and regulations in line with new law.
- According to the new gemstones law there are 3 types of gems mining. Medium scale, small scale and artisanal mining. Medium scale mining must be conducted by union government and small scale and artisanal mining must be conducted by local government. For medium scale mining the gems blocks will be defined inside Gems tracts. For small scale and artisanal mining the gems blocks will be defined inside or outside Gems tracts.
- According to the new gemstones law there are 3 types of gems mining. Medium scale, small scale and artisanal mining. Medium scale mining must be conducted by union government and small scale and artisanal mining must be conducted by local government. For medium scale mining the gems blocks will be defined inside Gems tracts. For small scale and artisanal mining the gems blocks will be defined inside or outside Gems tracts. Licensing Administration According to Gemstones law the permit for Medium scale mining and small scale mining have to be issued by tendering system. The permit for artisanal mining is depend on the rules defined by relevant local government. That is why Myanma gemstones licensing procedure is complicated. The company it want to hold the permits to produce gemstones has to submit the application form. We have to choose a company to issue permit by using tendering system. resource rich countries established various types of Licenses for mining industry. Reconnaissance, Exploration, Retention, Exploitation, Mining, prospecting license. Most countries allocate prospecting/reconnaissance and exploration licenses on a first-come first-served basis. Also auctions licenses for tracts that have already been prospected or explored, but issues licenses on a first- come first-served basis for unexplored claims. In Myanmar no gemstones exploration license will be issued and production license will be issued by auctioning system. An auctioning system depends on price submitted. In Myanmar we have to use tendering system. As you know, tendering system consists of 2 types. Pricing tender and Technical tender. Pricing is based on the price and technical tender is based on qualification and performance of company. When the companies their qualifications and performances are being in same level the company which submitted the highest price would be chosen to be permit holder. But if theirs are not in same level and the submitted prices are different I won’t be able to say which one should be the permit holder. For example company A has low performances and high submitted price, company has high performances and low submitted price, which one is better. Before promoting to a general manager I worked at licensing department as a head. I had been experienced in licensing administration for 6 years. But now I am confusing with gemstones license permitting producer even though having experiences. I have no idea. How to set up licensing procedure by using the tendering system.
- In this industry we have to follow two laws gemstones law and union taxation law to collect tax and fee. According to gemstones law Gems Block fee it can also called permit fee and Royalty and service fee Block fee which can be called tender price can be depends on existing region and deposit of gems and jade blocks. I million kyats For some blocks but 50 millions kyats . We can identify Two kinds of royalty tax, one is for production and the rest one is for selling, As Production Royalty for jade ,ruby, sapphire and diamond 10 percent based on the value by valuation team. For other gems 5 percent. As selling royality 11 percent for for raw jade and 9 percent for raw gemstones and 5 percent of finished products and jewelries. Service fee 3% service charge on the actual sale value of rough stones and 1% of the actual sale value of finished products is collected Commercial Tax There is no Value Added Tax (VAT) in Myanmar, but a Commercial Tax is imposed on a range of goods and services by The Union Tax Law annually released. By 2019-2020 law Commercial tax is to be paid 5 percent on the sale value of all gemstones . Revenues from Sale of Government’s Share According to contract companies split the balance into 15% to MGE and 85% for the company.
- Now one of our goals is to develop Finished Gems and Jewelry Industry. As you know, value addition can make gemstones got increasing in value by 100% - 1000%. Besides we want to prevent to illegal trade because most of Myanmar’s higher value gemstones leave the neighboring country in rough, for cutting, polishing, treatment, carving and other processing outside of Myanmar. But Myanma finished gems industry was not grown in domestic .Why finished gems industry increased? There have been many reasons. For example, All over the world Chinese love jade and wear jade products hundreds of years ago. Chinese jade carving masters are known to be the best in the world. Their creative design and crafts are excellent and nice. We are not able to make jade products like theirs. One article said In China over 90,000 workers are working jade curving factory. Guangzhou is famous place for jade cutting, polishing and carving. So they don’t want to buy finished jade products and quality jade is taken to China to be cut and carved into higher quality carvings. In Mogok, Mandalay and Yangon there are the places taking the cutting and polishing of coloured stones with poor quality instruments and equipment being used. At all locations these are traditional family-run businesses on a small-scale industry. jewellery manufacturing In Myanmar there are around 10,000 jewellery manufacturing workshops. These are mostly local small enterprises family run, To develop Finished Gems and Jewelry Industry we need technology, modern equipments and increasing skills levels. We cannot able to get and support by our self. So we put one subject related to foreign investment into gemstones law. According to The Gemstone Law we can issue a permit to an individual or an organisation wishing to make finished gemstones, manufacturing jewellery and selling rough gemstones, finished gemstones and jewellery and any items made with gemstones with foreign investment. but Till now no permit for foreign investor issued. The other reason is the adoption of sanctions on gemstones from US foreign policy since 2003. Because of this sanction foreign gems traders and investors did not do gems business in Myanmar. As a result, the three biggest markets for gemstone processing are India and Thailand , all of which are Myanmar’s neighbors. That is why to develop Myanmar finished gems industry, we need to do the things from current circumstances, 1. Financial incentives will be provided. 2. Foreign investment will be encouraged. 3. skills and technology transfer will be developed. 4. International-quality laboratories and training centers will be established. So we performed some activities to develop this industry. These are we built Shwe Kyar Pin Gems shopping center and open vocational train course. In 2017 I attended MBA course. For this course my thesis paper is Analysis on Promotion Strategies of Finished Jade Products Business in Myanmar. In this paper the suggestions I mentioned are; To improve connections with backward linkages (miners) and forward linkages ( brokers, wholesalers, retailers and end users) To perform technical assistances, trainings and encouragement of small firms , To relax regulations.
- In September 2016, the newly appointed State Counsellor visited the United States and met with President Obama in Washington DC. she requested US government support and technical assistance to help reform Myanmar’s gemstone sector. In November 2016, the US government lifted the remaining sanctions against Myanmar, including those related to gems and jade imports, and on State Economic Enterprises, including Myanmar Gems Enterprise. At the same time, the US Ambassador in Yangon met with the Minister of Natural Resources and Environmental Conservation, and with key gemstone-related stakeholders, to discuss options for addressing the many challenges of the sector. As a result of these meetings, in November 2017 a multi-stakeholder Gemstone Supporting Committee was established by the Ministry of Natural Resources and Environmental Conservation (formal notification number 106/2017). The Committee comprises key stakeholders from relevant government agencies, the gemstone and jewellery industry association, and from civil society. The Committee was given the mandate to develop an inclusive and comprehensive national gemstone policy. This policy describes the proposed strategic direction for the development of the country’s gemstone resources. It has been developed in recognition that it does not and cannot exist in isolation.
- 1.5 Policy Structure The policy is structured by five policy pillars that correspond to the gemstone sector value chain, from mine to market. A - Permitting, Exploration and Production B - Fiscal Regime and Revenue Management C - Environmental and Social Impact Management D - Value Addition, Beneficiation and Markets E - Institutional Governance Arrangements Policy statements We could expose 37 statements in gemstone policy. Now we are trying to get of legal advice of attorney general office approval of union government. Soon First gemstones policy will be launched in Myanmar. When complete, this policy will be the official guideline for the industry. the policy is expected to set consistent practices and guidelines for the jade and gemstone industry. The policy will cover procedures for the approval of licenses, testing and production, collecting tax, wider market penetration for value-added products and the preservation of the environment and social wellbeing.
- The Extractive Industries Transparency Initiative (EITI) is a global standard for transparency and accountability in the oil, gas and mining industries. In July 2014 Myanmar became an EITI candidate country. The EITI process is overseen and implemented by a multi-stakeholder group (MSG) of government, companies and civil society. Myanmar produced its first EITI report in December 2015. On 30 March 2018, Myanmar produced its second and third EITI reports which represent 2014-15 and 2015-16 fiscal years .
- There is an inherent conflict of interest between its role as a policymaker, a regulator and also as a JV partner. The existing arrangement does not meet international best practices for governing the State-Owned Enterprises. The cumulation of all these functions coupled with MGE’s limited capabilities represent a high risk of conflict of interest. Human resources capacity is also an issue for MGE in terms of staff with adequate technical skills and experience to manage its varied roles. MGE allocates only one staff number in each production field as a result of the limited number of staff. Reviews and strengthens the valuation process of gemstones by involving external valuers with extensive knowledge of the sector markets and valuation methods and by requiring checks against fair value/market price. Encouraging gemstone mines to begin adopting international standards for responsible mining, to meet the increasing global demand for responsibly sourced gemstone. Exploring the future potential of establishing a mine-to-market traceability system,