New policy to boost gold trade in UAE approved

The gold and jewellery trade contributes 20% of the country’s total non-oil exports

Gold bars are displayed at bullion house in Mumbai in this December 3, 2009 file photograph. Gold hit an all-time high on August 8, 2011 and investors sold off  other commodities from oil to grains, fleeing from riskier assets after the U.S. loss of its prized AAA credit rating stoked fears about economic growth.  Gold broke through the $1,700 per ounce mark for the first time, extending its bull run as a safe haven asset amid worries for global growth after agency Standard & Poor's (S&P) cut its rating for U.S. debt late on Friday (August 5, 2011).         REUTERS/Arko Datta/Files   (INDIA - Tags: BUSINESS IMAGES OF THE DAY) *** Local Caption ***  SIN999_MARKETS COMM_0808_11.JPG

A new policy to boost the UAE’s position as a global hub for the gold and jewellery trade was approved by the country’s cabinet on Sunday, according to state news agency Wam.

“The policy is designed to develop mechanisms and initiatives to maximise the benefit of the gold and jewellery trade, transforming the UAE from a regional hub to one of the global producing countries and leading designers,” the statement said.

“This will ensure the stability and prosperity of UAE’s gold trade, raise its competitiveness and maintain the leading position of the country as an important global hub.”

The new policy consists of 10 strategic programmes and initiatives, including the governance of the gold market at both federal and local levels and the establishment of a federal platform for gold trading. It also covers tracking the supply of gold and marketing the UAE's gold sector internationally.

The use of technology in the production of the precious metal and the establishment of a UAE international gold standard will also form part of the new programme, according to the statement.

“The policy will develop tools and initiatives that stimulate growth in order to facilitate doing business and bring added value to this vital sector. This will help boost the knowledge-based economy and contribute to increasing non-oil GDP, strengthening UAE’s domestic industry sector and the other supporting fields.”

The gold and jewellery trade in the UAE is one of the most important economic sectors contributing 20 per cent of the country’s total non-oil exports.

In the first half of 2019, 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.

The gold and diamonds trade has been historically important for Dubai, with around 800 shops located mainly around the city's gold souk in Deira. Commercial trade has also been growing in Dubai in recent years, but suffered a setback early in 2018 when a 5 per cent VAT rate was introduced across the country.

A reverse charge mechanism was introduced in May last year exempting commercial trade of precious metals and diamonds and although gold jewellery is still subject to VAT, it is fully refundable on purchases made by tourists.

Gold prices climbed above the $1,500 mark to six-year highs in August as investors concerned about the state of the global economy sought safe haven assets. On Sunday, gold was trading at $1,489 per ounce, with rates in Dubai at Dh180.50 per gram of 24 carat gold.