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Vietnam a promising market for diamonds
Vietnam proves to be a promising land for diamond trade deals with a demand for diamond jewellery of up to $300mil a year.
The fertile land
Vietnam does not have diamond mines, which means it has to feed its demand by imports. That explains why domestic diamond prices are always directly proportional to the world’s prices.
Currently, diamonds mostly come from Africa, Canada, Australia and Russia. Africa alone provides 60% of the total output.
Like gold, the price of diamonds has been increasing continuously as the diamond demand rises by 5% per annum, while the supply rises by 1% per annum only.
According to the Vietnam Gold Business Association, the demand for diamonds to serve the jewellery industry is very big, worth $300mil or more. Meanwhile China, a large market with the biggest increase in diamond consumption in the world, imported only $900mil worth of diamonds in 2007.
Every year, especially in the wedding season, gold companies launch a lot of diamond jewellery products onto the market. PNJ, SJC and DOJI have become the well-known trademarks for gold and diamond jewellery in Vietnam.
In early 2008, DOJI opened Diamond House in Hanoi, the biggest diamond centre in Vietnam so far.
Making and trading diamond jewellery proves to be profitable business. However, the fat profit made by companies is not mentioned, because this is always considered a ‘sensitive’ issue. The diamonds on sale in Vietnam come from different sources, and a big proportion of the diamonds come through unofficial channels.
Half-lit business
In 2005, the Ministry of Finance decided to lower the tax on diamond imports from 1% to 0% in order to push up the development of the diamond jewellery industry. However, the tax decrease has not led to an increase in diamond imports through official channels.
Clients now still have to buy diamonds on the market with no clear origin. As diamonds are small and portable, people can easily go through customs agencies and management agencies, bringing diamonds illegally into Vietnam.
A lot of diamond smuggling cases of up to hundreds of thousands of dollars have been discovered. However, these cases are just the tip of the iceberg.
Explaining why diamonds do not enter Vietnam via official channels, Dinh Nho Bang, Deputy Chairman and Secretary General of the Vietnam Gold Business Association, said that customs agencies collect 10% of VAT from diamond importers right at the border gates. The tax makes the production cost of diamond jewellery too high to be sold, as diamond jewellery proves to be a luxury product, not as popular as gold.
Moreover, enterprises do not want to import diamonds in big quantities, as the imports require big sums of capital, while it takes a lot of time to consume all the products, which means that big sums of capital would be buried in diamond import deals.
VNN
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