Gold exporters and manufacturers warn that offshore smuggling might increase if an export ban imposed by the Ministry of Industry and Foreign Trade is not lifted.
Wasfi Amin, the head of the gold jewelery sector at the Federation of Egypt Chambers of Commerce (FECC), said his department had submitted a memo to Minister of Finance Samir Radwan, asking him to urge the Industry Ministry to lift the ban which, he said, will affect the state's foreign currency resources.
Meanwhile, market traders said the ban, which was imposed in February, have helped stabilize local prices recently.
The export ban created a gap of LE12,000 between world and local gold prices, which led to the spread of smuggling, Amin told Al-Masry Al-Youm.
He said old mechanisms maintained a price difference of LE100-LE150 per kilo, noting that the gold market is going into a recession and fewer are buying the precious metal. Amin said the ban caused the market to freeze, as traders, who used to rely on buying from citizens before selling to exporters, no longer have the liquidity needed to purchase gold.
Exporter Ahmed al-Mawardy said that gold smuggling to Jordan, Saudi Arabia, and Dubai is thriving. He said smugglers use cargo and refrigerated trucks to hide gold from customs authorities.
According to al-Mawardy, Egypt exported as much as 14 million tons of gold last year. Exports were expected to increase as citizens were eager to sell some of their gold for cash due to the recent unrest.
He added that the ban would negatively impact the state and the central bank's foreign currency reserves, saying that gold exporters used to pump about $60 million in export returns into the treasury each month.
The Industry Ministry imposed the ban on 27 February, saying it would be temporarily applied as means to prevent former officials and businessmen from illegally transferring their money abroad by turning it into gold.
But al-Mawardy contended that gold exports are subject to tight scrutiny and the industry already has enough protections in place to prevent former officials and businessmen from getting their money out of the country this way.
Translated from the Arabic Edition