Gold and Silver News
Gold Smuggling Rampant in Bangladesh
Bangladeshi officials have claimed the country is becoming a hub for gold smuggling, with an ever-increasing number of criminals caught trying to move bullion into neighbouring India.
Mainul Hossain Khan, a customs intelligence chief, said he and his team have seized 623 kg of the precious metal since July last year. This compared with just 15 kg captured over a five-year period previously.
Talking to Agence France-Press (AFP), he said the country’s two international airports have seen a big rise in illegal gold movement, with smugglers frequently caught red-handed.
“Gold seizures in the airports have become a daily affair,” he explained, adding that his team had just that day found 27 gold bars stashed in a microwave.
Smuggling in the region has risen largely due to India’s imposition of strict import duties on gold being brought into the country.
Due to the precious metal’s overriding cultural significance and popularity in India, people have tried to circumvent regulations through illegal trade. Buying gold is considered auspicious in the country and it is often purchased for weddings and Hindu festivals.
The tax on gold is currently set at 10 per cent for imports, having increased in increments from 2 per cent last year. There is also an 80:20 rule in effect, which means one-fifth of all gold brought into the country must be earmarked for future export.
According to Bangladeshi officials, criminals are finding it cheaper to bring gold from the Middle East into their country and then smuggle it over the border to India.
In an effort to stem illegal activity, Bangladesh also raised its import taxes, hoping that bringing them in line with India’s would halt smuggling. However, authorities claim this has had little impact.
Tip of the iceberg
Customs Commissioner Hossain Ahmed told AFP that gold bullion discovered by officials in Bangladesh is only part of the equation.
The Bangladesh-India border is over 4,000 km across, and Mr Ahmed believes smugglers are taking the yellow metal into India via land routes.
He stated. “The amount of gold seized by our officials is only a fragment of the bullion that is being brought to the country.
“We believe the gold which is imported to Bangladesh both legally and illegally is smuggled to India.”
Regardless of the end destination for the gold, the rise in seized assets is proving to be positive for Bangladesh’s central bank. All captured precious metals are added to the country’s reserves.
The situation is also likely to continue, as India recently claimed import duties will remain in place for some time.
Trade Minister Nirmala Sitharaman was quoted by Reuters as saying she could not say whether gold smuggling had increased due to the country’s taxes, but confirmed the country will continue on its current path.
“Yes, the current account deficit (CAD) has come down. But immediately, there is no plan to reduce import duty,” she added.
Some investors have questioned whether data regarding the CAD is reliable, with many pointing to the increase in smuggling as potentially distorting the figures. Regardless, experts have claimed there is unlikely to be a reduction in import duties until at least the next fiscal year.
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