A policy approved by the UAE Cabinet on Sunday aimed at strengthening the country's position in the gold and jewellery sector is a vital step for the future growth of the industry, experts say.
"The new policy will enhance transparency as it will enable the tracking of gold. It will be positive for the growth of the industry," said Tawhid Abdullah, chairman of Dubai Gold and Jewellery, a trade body representing retailers in the emirate.
“New information will be available on gold and jewellery as per the international standards that will further boost trade. We’ve been demanding for the implementation of such a policy for the past few years,” said Mr Abdullah, who is also managing director of Jawhara Jewellery.
The policy includes a number of initiatives including governance of the gold market at both federal and local levels and the establishment of a federal platform for trading, according to state news agency Wam. It also covers tracking the supply of gold and marketing the UAE's sector internationally.
The use of technology in the production of the precious metal and the establishment of a UAE international gold standard will also be part of the new programme.
“The use of technology in the production is also a welcome step and will help in easing our business in getting finance from the banks,” Mr Abdullah added.
Gerhard Schubert, founder of Schubert Commodities Consultancy at the DMCC, also praised the policy initiative.
“Overall, the development is very exciting and positive. It also highlights the federal acknowledgement of the gold industry and its importance to the growth of the GDP [gross domestic product] in the country,” Mr Schubert said.
“Before this announcement, the gold industry in the UAE was fragmented in different emirates and free zone and non-free zone entities and now it [will be] pretty much streamlined,” he added.
Gold and jewellery is an important sector of the UAE economy, with precious metals and diamond trading contributing 20 per cent of the country’s total non-oil exports.
In the first half of this year, the total value of gold, diamonds and jewellery traded through Dubai totalled Dh180 billion, an increase of 3 per cent year-on-year, the Dubai Media Office said earlier this month.
Vijay Valecha, chief investment officer at Century Financial, said that annual global jewellery demand is upwards of 2,200 tonnes with the value of trade surpassing more than $350bn (Dh1,285bn).
“Clearly there is a huge opportunity for UAE to capitalise on this opportunity, with the two biggest consumers of gold, China and India, in the geographical vicinity of Middle East," he said.
“The new policy for gold trade, in which it has been allocated priority status and the introduction of a uniform UAE gold delivery standard will help in promoting the manufacture and design of gold."
Mr Valecha said the establishment of a federal platform for gold trading and the introduction of a system for tracking gold would help to boost transparency.
“One of the most important aspects of gold is the trust factor and the introduction of a uniform standard will create a ‘Made in UAE’ brand known for quality. This is indeed a move that can further strengthen the position of UAE as global hub for gold trade,” he said.