Gold-leaf producers feel price pinch
GOLD-LEAF producers in Mandalay are feeling the squeeze, as rising gold prices, commercial tax and the monsoon season take their toll on the industry.
Despite having customers nationwide in the form of pagodas, the goldleaf industry is in a sorry state, business owners say.
With gold prices on an upward trajectory, estimating the cost of a project in order to submit a tender becomes a tricky proposition, with some gold-leaf sellers saying they find themselves absorbing significant losses.
The international gold price increased from US$1058-$1061 per ounce in the first week January to $1335-$1343 in the third week of August.
This has driven local gold prices up to K860,000 per tical (a traditional measurement for the commodity, equal to 0.576 ounces or around 16 grams).
“The gold price always goes up,” Daw Nwe New of Shwe Hninsi Gold Leaf told The Myanmar Times.
Daw Thin Thin Htwe of Sein Thiha gold leaf said she has also experienced difficulties with tenders in the past as a result of price variability.
“After we accepted the tender for Bago’s Shwemawdaw Pagoda, the gold price increased sharply. But we are working with the contract. We faced a loss but we must give them the gold leaf as per the contract. If the pagoda gave us the gold for the gold leaf, we would not worry about the price,” she said.
Orders of gold leaf are made according to size specifications made by the client. The most common size ordered is around 2 square inches, which sells for about K39,000 for a pack of 100.
On top of gold price woes, commercial tax presents another issue for suppliers.
“In the past, we paid K200,000 [$170] for tax. But this year, the tax has increased. For example, Mahamuni Pagoda bought gold leaves from us for about K30 million [$26,000] in 2015. We have paid K1.6 million [$1350] in taxes this year,” Daw Thin Thin Htwe said, adding that gold leaf producers face additional expenses including wages, raw materials and industry registration fees.
She said gold-leaf workers – who use traditional, labour-intensive means to create the thin sheets of gold – are also likely to receive a pay rise once the monsoon season is over, following complaints by employees.
“The price of gold leaf will increase, but all gold-leaf businesses need to consider this carefully because our products are for pagodas,” she said.
Daw Nwe Nwe said the gold-leaf market is a crowded game these days. “When I was young, there were 20 to 30 [gold-leaf producers], but now there are over 100,” she said.
Pagodas put out a call for tenders at set intervals: For some it is once every three years, for others every six months. Some do it as often as every six weeks. Shwe Hninsi Gold Leaf
Mandalay’s Mahamuni Pagoda called for tenders five times last year. Over 100 bids were made on the first tender, with 66 businesses receiving orders.
Myanmar’s gold-leaf producers have also faced competition from neighbouring Thailand, where nonhandmade alternatives have entered the market.
“That was used in Shwedagon,” said Daw Nwe Nwe. “But most [pagodas] like our handmade products. Our products are traditional, handmade artwork.”
‘When I was young, there were 20 to 30 [gold-leaf producers], but now there are over 100.’
Daw Nwe Nwe
A worker pounds gold into thin sheets in Mandalay.