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To Grapple with Crisis is Possible

23 february 2009

Valery Radashevich, General Director of the Guild of Russian Jewelers, told about the work performed by this Association and problems encountered by jewelry manufacturers and merchants to Vladimir Teslenko, Rough&Polished correspondent.

In what way the jewelry industry may be affected by the crisis in 2009?

In 2009, jewelers expect a decrease in domestic production up to 50% along with gold retail sales going down 25-30% in terms of jewelry pieces sold. Silver sales are expected to rise 30%. Higher retail prices for jewelry pushed up by inflation and a world gold price above $1000 per ounce may bring about a plateau in terms of rouble sales in 2009.

What is the role of the Guild of Russian Jewelers?

Ten years ago, in 1998, there was established the “Guild of Russian Jewelers” Foundation. In 1998, the legislative and economic conditions were not instrumental to legal business and jewelry production was going down catastrophically – such was the situation on this country’s jewelry market. In 1999, the Guild of Jewelers initiated a temporary government body, the Commission for Developing Proposals on Assisting Jewelry Industry out of Crisis. As I deem it, our achievements include the following:

1. Gradual reduction and complete cancellation of the excise tax on jewelry.

2. Cancellation of licenses for all kinds of businesses envisaged by the Federal Law on Precious Metals and Gems.

3. Participation in drafting the President’s Decree on Import and Export of Precious Metals and Products Made of Precious Metals which cancelled quotas and licenses for exporting products made of precious metals.

4. Taking part in the work related to introducing amendments to the Federal Law on Foreign Currency Regulation which resulted in excluding precious metals and gems from the “foreign currency assets” notion.

5. Blocking the Bill on Canceling VAT on Sales of Precious Metal Ingots to Physical Persons.

6. Emergency work in the fourth quarter of 2004 and in January 2005 when the payment for assaying and hallmarking jewelry products received the status of a state duty and when the Tax Code set the limits of this duty.

7. Preparation and holding of the First and Second Congresses of Jewelry Market Participants.

8. Execution of the Agreement on Cooperation with the Delovaya Rossiya Non-Governmental Association.

9. Taking part in passing the Federal Law on Self-Regulating Organizations signed and enacted by the President of the Russian Federation in 2008.

10. Taking part in the work of expert councils at the Committees of the State Duma and the Committee in Support of Entrepreneurship of the Chamber of Commerce and Industry of the Russian Federation. Working out the Draft Concept of Jewelry Industry Development in Russia.

What is the main danger for jewelers today?

The current wording of the Federal Law on Precious Metals and Gems. One sore point in it is waste recycling by the jewelry industry accompanied by the accusation of jewelry manufacturers in dodging refineries. The second point is the voluntary hallmarking of exported jewelry. The third point refers to the voluntary hallmarking of silver jewelry pieces weighing up to three grams. The fourth point deals with the introduction of a special import mark and hallmarking of imported jewelry items at specially designated assay inspection offices.

In 2007, there were established the Association’s Committee on Gems and the Jewelers Guild’s Certification Centre. In what way can this be useful in the field of rough and polished diamonds?

The Committee has provided all the conditions for the introduction of voluntary certification of jewelry, including diamond jewelry, as well as for voluntary attestation of jewelry stores, which will undoubtedly facilitate protection of jewelry manufacturers’ and consumers’ rights from unfair competition and contribute to consumer confidence towards Russian jewelry. To build up the necessary legislative basis, the Committee on Gems is involved in developing a national standard, “Jewelry Products of Precious Metals,” as well as the Association’s standards on colored polished gems which may be used by the jewelry marketers in their business in the absence of national standards. The standards are of special significance to those who intend to export their products. As is known, the Association is taking measures to attach an export-oriented status to the jewelry industry, which is turning indispensable in the crisis environment.

Tell me please what are your major apprehensions with a view to the crisis?

We have every reason to think that in some time there will be a supply chain going via Armenia – companies will pay no taxes to take rough materials out of Russia through this country to China and Turkey and take them back again tax-free. However, the Guild and the Ministry of Finance of the Russian Federation supervising the jewelry industry are aware of this danger and are planning some adequate measures.