By Manik Mehta
Though it has strong credentials to become an international gold jewellery supplier, Malaysia has so far maintained a low-key posture in the global jewellery trade. Indeed, its reputation is nowhere near that of India or China or even neighbouring Thailand, countries that have over the years left a mark on the international jewellery trade and industry.
But things are changing – slowly but steadily – in Malaysia’s favour. Malaysia’s gold suppliers have been exporting about 60 metric tonnes of finished gold products in the form of ornaments and other products each year, giving the country a strong push that could elevate it into the exclusive international arena of jewellery suppliers.
Malaysia’s jewellery manufacturing and trade had been traditionally monopolized by a few family-operated businesses but in recent times many enterprising business people have converted what once were small cottage industries into luxury retail outlets whose combined worth could be in the region of some RM7 billion (or about US$2 billion). That, for a country of 28 million, is a large figure.
Ermin Siow Der Ming, deputy president of the Federation of Goldsmith and Jewellers’ Associations of Malaysia, recently said that locally designed and manufactured gold ornaments had become popular, thanks largely to their intrinsic beauty which, in turn, could be attributed to the country’s rich diverse ethnic culture; this was reflected in the diverse likes of the Malay origin people who preferred floral designs while the Chinese liked geometrical background and the Indians had a weakness for intrinsic handy designs on the products. This pattern of jewellery, according to Siow, was building up a reputation for the country worldwide.
According to Malaysia’s Ministry for International Trade and Industry (MITI), the country’s gold jewellery, silver and platinum exports have been growing since years, from RM5.4 billion (US$1= RM3.266) in 2010 to RM6.2 billion in 2012. Indeed, buoyed by free trade agreements (FTAs) which Malaysia has entered into with a number of countries, jewellery exports rose 8.6 percent to RM7.73 billion in 2013.
Of course, exports were also helped by the depreciation of the Malaysian currency Ringgit against the US dollar, a trend which was noticed throughout 2013, according to George Lo Siew Cheong, chairman of Penang Goldsmith, who had predicted a sharp rise in jewellery exports, further aided by relatively lower gold prices.
Malaysian gold ornaments also appeal to buyers, particularly, in India and China where 22- or 24-karat gold is appreciated. But some 80 percent of Malaysia’s exports are bound for Dubai from where the jewellery is re-distributed to other international markets. Some of Malaysia’s gold jewellery suppliers including Tomei Group, Niche Capital Emas Holding (formerly Yikon Corp. Bhd), DeGem and Habib Jewels have been asserting themselves in the global markets with their exquisite and world-class designs.
But many of these established players are pitted against giants such as India, China and Italy in addition to neighbouring Thailand, all of which have carved a niche for themselves in cutting-edge branded jewellery.
However, Malaysia’s maturing domestic industry needs to compete with giants like China, India and Italy, and close to home Thailand — all famous for their cutting-edge branded jewellery.
Indeed, Malaysia trails much behind India which is the world’s top gold-jewellery exporting nation, with its exports of jewellery and gems touching US$38 billion in 2012, followed by second-ranking China at US$30 billion and Thailand, ranked 12th, at US$13 billion. But Malaysia is working hard to join the league of the top jewellery exporting nations.
On the domestic front, however, Malaysian consumers resorted to buying gold when its price surged in the last decade; many Malaysians started to buy gold items as safe investment products that hedged against inflation. A leading Malaysian jeweller Poh Kong Holdings Bhd was upbeat about retail sales of finished gold jewellery and investment bars.
A major development taking place in 2015, the creation of the Asean Economic Community (AEC), which will take the group of Association of Southeast Asian Nations (ASEAN) to the next level of economic integration, is being enthusiastically watched by Malaysia’s jewellery trade as tariffs will be removed on a large number of goods traded among the group’s 10 member states.
Habib Jewels, one of Malaysia’s biggest jewellery manufacturers with a large nationwide network of stores, has been penetrating not only the domestic but also foreign markets with a string of innovative and new designs that have not only local but also regional and international appeal.
In an interview with Hong Kong Jewellery, Habib Jewels’ general manager, Mohd Zaruddin Mahmud, was upbeat about business as he pointed out to the set of new designs presented under the slogan ‘Spring is in the Air’ that had been created for the 2014 Chinese New Year.
“Our 2013 business grew by some 25 percent over 2012. However, for the current year, we may not have the same growth rate,” Zaruddin said.
According to Zaruddin, Habib Jewels supplies customized, upper-end products suit to the customers’ specific needs. “We are thus building up an exclusive clientele,” he maintained.
Gold prices have been fluctuating, but stabilized after recording a sharp decline in the months of April, May and June 2013. Habib Jewels’ general manager said that the company also had a market for antique/classic designs; many of such designs are of Penang origin. “Our jewellery museum in Penang offers a good overview of such designs. The museum has two categories of jewellery – antique collection which is not for sale, and the classical designs which are currently in demand,” Zaruddin said. Some 70 percent of the jewellery sold by Habib Jewels’ have local content designs. The company also participates in trade shows in Dubai, Bahrain, Hong Kong and Singapore.
Zaruddin highlighted some of the idiosyncrasies of Malaysia’s jewellery market, including precious stones and metal.
“We have importing ‘Hearts on Fire’ high-end products from Boston. We use 18-karat gold for the Malaysian market. Indeed, the diamonds cut by ‘Hearts on Fire’ are appreciated in Malaysia, though Malaysians, in general, prefer plain diamonds though we also increasingly discern demand for black diamonds. Men like to wear black diamonds. There is also demand for yellow diamonds, though not as much as for white and black diamonds. Chinese buyers in Malaysia prefer medium to low-end products. The Chinese prefer to buy gold because it is auspicious but they also buy diamonds. Gold price has been rising again after a lull for a few months. However, gold rose steadily in the past five years, because demand for the yellow metal was high. Gold bars are popular among consumers as an alternative to invest in banks which offer very low interest rates,” he observed.
Though prices have been lately rising, Zaruddin ruled out that they would reach the level of the past years.
Indonesia, Malaysia’s neighbour and a buyer of Malaysian jewellery products, is one of the biggest high-end markets of Southeast Asia. Dubai also has high-end customers while Hong Kong has medium-end buyers, according to Zaruddin.
Malaysia’s jewellery trade depends largely on its ethnic diversity which buys jewellery during their religious festive seasons. The Malays, Chinese and Indians buy jewellery but the modern and young consumers buy diamonds.
However, some Malaysian jewellers privately expressed concern over the decision by the Malaysian government to impose a 6-percent general sales tax (GST) on jewellery sales from April 2015. This move, according to the Malaysian jewellery trade, would affect their sales. Foreign tourists can, however, claim tax refund, a move aimed at promoting tourism to Malaysia.
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