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Any color diamond is a great investment

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Thailand, a leading high-quality gem and jewelry manufacturing center

10 april 2017

Will the increasing importance of the Association of South East Asian Nations (ASEAN) bloc on the global economic stage enable Thailand to further cement its role as a vital diamond, gemstone and jewelry center and one that connects and provides services to the region while also serving as a bridge connecting it to the wider world? The ASEAN grouping includes Brunei Darussalam, Myanmar/Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam. Thailand serves as a jewelry trading center, and being part of the ASEAN bloc allows it to re enforce its position vis-à-vis regional diamond and jewelry powers such as China and India.

Modeled loosely on the European Union, the ASEAN group already numbers more than 650 million people, almost double that of the United States, and beyond the approximate 520 million population of the European Union. In addition to a huge consumer market, the region also has the third-largest number of workers in the world, with only China and India having more. This common market allows for the free circulation of people and goods within member states, as well as agreements on issues as diverse as social and environmental protection and security.

At the heart of the ASEAN bloc, Thailand has huge advantages as the main gem and jewelry center, with decades of experience as a center for trading, manufacturing and gem labs. The Thai government is working to further expand the country's precious stones and jewelry industry, which is estimated to account for around 5 percent of the country's exports, with its involvement in the organization of the September Bangkok Gem and Jewelry Fair.

Thailand, with Bangkok and Chanthaburi, is set remain as the top gems and jewelry hub in the ASEAN bloc where gem-mining countries such as Myanmar, Vietnam and Cambodia are also located. As recently highlighted by CIBJO President Gaetano Cavalieri, Thailand, with its import /export gemstone procedures, large inventory of goods, numerous and well-established national and multi-national jewelry manufacturing companies, and being a reputed laboratory and research center, is already perceived as the natural exchange platform for the gems and jewelry industry in the area.

Traditionally, the region has been dominated by the Jaipur gems and jewelry community. However, it is clear that competition for pole position in a global economy where Asian countries will grow dramatically in importance, will include China, India and their huge and expanding domestic markets, accompanied by gem trading and manufacturing countries such as Thailand.

Thailand is one of the world’s largest suppliers of high-quality gem and jewelry. Its reputation as gem and jewelry manufacturer might not be comparable to China and India in global statistics. However, in terms of gem and jewelry manufacturing with outstanding designs and exquisite craftsmanship and reasonable labor costs, Thailand has always been internationally recognized as being at the forefront.

Thailand is widely known as a manufacturing center for high-quality polishing. It also has skilled labor in color stone quality enhancement, casting and molding, especially in pieces with delicate details, as well as gem setting.

The level of labor skills is one of the most important factors in jewelry manufacturing, especially in luxury products where craftsmanship is a high priority. Due to its resource depletion, Thailand imports stones and uses its gemstone quality enhancement knowledge and expertise gained over many decades. Meanwhile, the industry receives support from the government through tax incentives and trade facilitation measures for foreign gem dealers. As a result, gemstones from various sources around the world are brought into Thailand.

Apart from its strong infrastructure regarding diamond and colored gemstones and jewelry manufacturing, Thailand has also implemented various policies to promote gem and jewelry trading and investment. In the upstream sector, duty exemption is granted for the import of raw materials, including various kinds of precious metals, diamonds, pearls and synthetic gemstones, to relieve Thai entrepreneurs of some of the tax burden, resulting in a cost advantage and increased competitiveness. As for the downstream part of the industry, jewelry products are also given tax benefits through a special trading channel for the Bangkok Gems & Jewelry Fair, held biannually in February and September, where import duty for jewelry is exempted from its usual rate of 20 percent.

The Board of Investment (BOI) is another organization which plays an important role in its promotion of investment through tax benefits and trade and investment facilitation for foreign investors in Thailand, allowing them to utilize the country’s potential to upgrade their businesses and improve productivity in manufacturing and export to global markets.

Many leading gem and jewelry manufacturers and suppliers have long operated in their manufacturing centers in Thailand. For example, Georg Jensen, a manufacturer and distributor of high-quality silverware and silver jewelry with exquisite craftsmanship and unique designs, has a manufacturing center in Chiang Mai province in the North of Thailand, and Rosy Blue, one of the world’s leading diamond manufacturers, has a facility in Phitsanulok province serving as its diamond polishing center to cater the global market.

Perhaps best known for manufacturing in Thailand is jeweler Pandora. In November, Pandora opened a new manufacturing facility in Lamphun, close to Chiang Mai in northern Thailand. The new factory is being ramped-up to be ready to start commercial production in the first months of this year. It will eventually employ up to 5,000 people, and according to Pandora, will offer some of the best working conditions and most modern production facilities in Asia. The company adds that the plant will set new standards for the jewelry industry in terms of scale, size, green profile and modernity.

The new factory is the third for Pandora, which does all its manufacturing in Thailand. “The site in Lamphun is the first of our recent initiatives to go live, but we are continuously expanding our production capacity, with a planned total investment of $265 million between 2015 and 2019,” said Pandora's Senior Vice President, Group Operations, Thomas Touborg in November.

In addition to the new facility in Lamphun, the capacity expansion program includes building an additional crafting facility in Gemopolis near Bangkok, as well as optimizing the existing crafting facilities in Gemopolis.

“With these initiatives, we will be able to potentially double our total production capacity compared to 2015 to more than 200 million pieces a year by the end of 2019, and we aim to reduce lead-time from raw material to jewelry delivered by around 50 percent,” Touborg commented.

Apart from tax benefits, investment facilitation, and infrastructure provided by the Thai government, foreign investment enterprises can also access other benefits according to bilateral and multilateral free trade agreements.

By Albert Robinson for Rough&Polished


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